Man’s dearest possession is life. It
is given to him but once, and he must
live it so as to feel no torturing
regrets for wasted years, never
know the burning shame of a mean
and petty past; so live that dying,
he might say: all my life, all my
strength were given to the finest
cause in all the world - the fight for
liberation of Mankind.
- Nikolai Ostrovosky
1904-36
India Becoming Colony Again
• Reprint
September 2013
June 23, 2012
• Reprint
• Second Edition: October 14, 2010
• First Edition: December 1, 2008
• Published and Printed for Lokayat by:
Alka Joshi, c/o Lokayat, 129B/2,
Opp. Syndicate Bank,
Law College Road, Pune - 4
• Printed at:
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Suggested Contribution Price Rs. 20/-
selfishness and unconcern and apathy for others - this is the reality
of today. In the name of fighting terrorism, the criminals and murderers
who dominate the Indian Parliament are passing draconian laws giving
the police powers to arrest ordinary people and put them behind bars
for years without trial!
The common people have not been silent spectators to this
sordid drama being enacted by the MNCs and their Indian
collaborators. Like flowers springing up in every nook and corner
with the onset of spring, all over the country, people are coming
together, forming groups, and raising their voices in protest. Though
these struggles are presently small, scattered, without resources, the
future lies in these magnificent struggles. As more and more people
join them, they will strengthen, join hands, and become a powerful
force which will transform society.
We must stop being skeptics, dream of a better future, believe
that it is possible to change the world. Yes, Another World is Possible!
But to make it a reality, we must start our own small struggles. And
so, we have started this forum, ‘Lokayat’, the purpose being to
reach out to ordinary people who wish to do their bit for transforming
society for the better, and take up various activities with their cooperation.
Dear friends, this is a small attempt to reach you. Many of
you do not know us. Nevertheless, we believe that you will agree
with the thoughts expressed above. But your agreement is not
enough, your active participation is of the utmost importance. You
may contact us at any of the addresses mentioned below.
Contact phones:
Neeraj Jain
94222 20311
Ajit Penter
94235 86330
Trupti
94223 08126
Website & E-mail:
www.lokayat.org.in
lokayat.india@gmail.com
Contact Address:
Lokayat,
opp. Syndicate Bank, Law College Road,
Near Nal Stop, Pune - 4
We meet every Sunday from 5 to 7 pm at the Lokayat Office (at the
address given above).
CONTENTS
India…
Becoming
a Colony Again
Introduction to Second Edition ............................................. 01
Introduction to First Edition ................................................. 02
I.
Why Globalisation? ..................................................... 05
II.
Myths about the Benefits of FDI Inflows ..................... 12
III. Impact of Globalisation on India’s Forex Crisis ............. 18
IV.
Impact of Globalisation on the Indian Economy ............ 22
V.
The Ephemeral Boom Goes Bust ................................ 47
VI. Entrapped in a Financial Whirlpool ............................... 49
VII. Impact on People ....................................................... 54
VIII. For a Second Freedom Struggle .................................. 71
LOKAYAT
a forum for a new world
References ......................................................................... 77
About ourselves, Lokayat .................................................. 86
INTRODUCTION TO SECOND EDITION
INTRODUCTION TO FIRST EDITION
India is shining. The International Monetary Fund in October 2010
revised upwards India's economic growth forecast to 9.7% for calendar
year 2010, citing robust industrial output and strong macro-economic
indicators.i The stock market is on a roller-coaster ride, and crossed the
20,000 figure in September 2010. According to Forbes rich list, the fastgrowing economy minted 17 new billionaires in 2010, driving the total to a
record 69.ii Another report, by Merill Lynch and Capgemini, says that the
number of high net worth individuals (HNWIs) in India – those who have
disposable assets of over $1 million (4.6 crore) – increased by 51% over
the previous year to an estimated 1.27 lakh during 2009.iii It is not just the
Indian press and electronic media that talk incessantly of India's arrival on
the world stage; even renowned international authorities from investment
expert Sam Mahtani to management guru Peter Drucker are predicting
that India is on its way to becoming an economic powerhouse.
All this sounds very much like a repeat of 2006-07. Then too the
economy had been growing at near double digit rates – around 9%, the
stock market was booming and crossed 20,000 in end-2007, and the pundits
declared that the country was heading towards becoming an economic
superpower.
We first started writing this booklet in mid-2008, by when it had
become clear that the boom had started to run out of steam. We explained
that it was a distorted boom. The high growth rates of 2004-08 had been
artificially triggered, were not based on increasing the purchasing power
of the majority of the people who were living in abysmal levels of poverty,
but instead were based on a very narrow base, were fuelled by triggering
an artificial investment boom based on plunder of wealth and resources of
the people by big corporations and by triggering an artificial consumption
boom by the rich. And so, just when the official economists were
proclaiming that the country was entering a new stage of permanent high
growth, the economy started slowing down.
To any careful reader of this booklet, it will be obvious that the
present boom of 2010 is also ephemeral, because the fundamentals of the
economy remain the same as in 2007iv ...
October 2010
Lokayat
1
Friends,
It’s not very long ago that this country was a British colony. The
first thing the white-skinned colonizers did after they subjugated our land
was to destroy the economy and remould it to suit their interests. On this,
they erected a colonial social, cultural and educational edifice. They also
domesticated a few ‘Wild Natives’ to sing paeans to them: the British
were supposed to have come to civilize us. Their rule lasted 200 years.
The people of this country fought long and hard and finally won
freedom. But now history seems to be repeating itself once again.
Appearances may differ, but the essence is the same.
In the name of globalization, the foreign brigands are being invited
back into the country. Times have changed. Last time they had to use
force. This time they are being welcomed with open arms. The Prime
Minister and his Cabinet untiringly sing eulogies to them. We are being
told that since we have been unable to manage our economy, the World
Bank (WB) and International Monetary Fund (IMF) have come to help
us. The giant corporations of the developed capitalist countries, also known
as Multinational Corporations or MNCs, will provide us advanced
technology and capital, increase our production and exports. All our troubles
will now be over. “India is shining”, India is becoming an “economic
superpower”; and now after the 1,2,3 Nuclear Deal, India will soon become
a “nuclear superpower” too! In gratitude, the PM went to Washington
and told Bush: India loves you.1
India is indeed shining, for the rich! In
2007, India had 533 Rupee Billionaires, whose
collective wealth stood at Rs.12.32 lakh crores.
This was double that of the previous year, and
four times that of 2005, when it stood at a paltry
Rs.3.64 lakh crores. The membership of the
club also grew, 168 new people joined the club,
who just months ago were mere millionaires.
The magazine that keeps track of these worthies
(Business Standard) put it simply: “India’s
billionaires have never had it so good.” 2
2
India becoming a colony again...
The media daily highlights news of the growing wealth of the Tatas
and the Ambanis. Of their acquisition of foreign companies. Of India’s
high GDP growth rates, rising FDI and FII inflows, export growth rate,
and so on. Of our booming software exports. Of the flooding of India’s
markets with the biggest consumer brands from around the world. And
so, even common folk have come to believe that India is becoming an
economic superpower. Even though they can only gaze at these luxury
goods in glittering malls from outside. Even though the only jobs available
for college students pursuing a B.A. / B.Com. degree are marketing jobs
with a monthly pay of between Rs.1500-3000.
However, the real question before the vast majority of the common
people is: how does this increase in wealth of the richest of the rich help
them? Are they getting decent jobs? Are they getting higher salaries? Are
the prices of consumer goods of daily use (not luxury goods) falling? Is
education getting cheaper? Are they getting better quality health care at
cheaper rates? Are housing prices becoming affordable? Etcetera, etcetera.
Obscene Inequality
The reality is that globalization has led to a transformation of the
country into a first world – fourth world
society. While a small percentage of the
population has entered the first world and
lives in first world lifestyles, crores of
ordinary people have been pushed down
to fourth world immiseration. They have
never had it so bad. This is evident from a
host of government data.
In the 1970s, the Planning Commission defined poverty based on
nutrition norms wherein all people unable to access 2400 calories and
2100 calories per capita per day in rural and urban areas respectively
were to be considered poor. (Rural energy norms were set higher as more
rural workers perform harder physical labour as compared to workers in
urban areas.) As per these norms, according to official surveys (called the
National Sample Surveys or NSS), three-fourths of the rural population
(74.5%) in 2000 did not get the minimum recommended daily calories!
Their monthly expenditure per person was less than Rs.565. The situation
in the urban areas was slightly better: 45 % of the urban population,
Lokayat
3
which was spending below Rs.625 per month per person, obtained less
than the minimum recommended daily calories.3
The latest official survey carried out in 2004-05 shows that the
situation has considerably worsened: an appalling 87% of the rural
population was unable to access the minimum recommended 2400 calories
per day! The corresponding percentage for urban India, where the nutrition
norm is lower at 2,100 calories, was 64.5.4
Then how come the government figures derived from the same
data show that poverty has fallen during globalization years? For instance,
the government claims that rural
poverty has fallen from 36% in
1993-94 to 27.5% in 2004-05. The
government has succeeded in
uplifting 60% of the rural population
above the poverty line by a simple
trick: by simply lowering the
poverty line! The new poverty line
has nothing to do with whether a
person is able to access the
minimum recommended calories.
Thus, in 2004-05, while nutrition data
from the NSS 61st Round (2004-05)
show that a person needed to spend Rs.795 in rural and Rs.1,000 in urban
India a month to access 2,400 and 2,100 calories respectively, the official
poverty lines for that year were only Rs.356 and Rs.539, half or less than
half the actual requirement, at which only about 1,800 calories could be
accessed.5
These shocking data are also confirmed by other nutritional and
health surveys. According to the National Family Health Survey of 200506, nearly half (46%) of India’s children under the age of three are
underweight, an indicator of malnourishment, and 38% are stunted, which
means that they suffer from chronic malnourishment. The figures for
anemia are even more alarming: 79% of kids between the age of 6 and 35
months are anemic.6
Malnourishment impairs mental and physical development of
children. According to the UNICEF, no other country is worse off than
India in the case of malnourished children.7 How can a country which is
4
India becoming a colony again...
home to more than 40% of the world’s malnourished children8 claim that
it is on its way to becoming an economic superpower? It only means that
the country’s much hyped growth rate of 8-9% per annum is not trickling
down to the people.
These terrible figures are further corroborated by a recent report of
the National Commission on Enterprises in the Unorganised Sector
(NCEUS), which was submitted to the Prime Minister in August 2007. It
says that the overwhelming majority of the population – 77 percent, or 836
million people – are living on Rs.20 or less a day.9 How must people with
monthly incomes of Rs.300 – 400 – 500 be living? If all that you can spend
is at the most Rs.10 to 18 a day, what do you spend it on? Contrast this
with the combined wealth of the 533 people in the billionaire club – Rs.12
lakh crores. Enough to run a rural employment program for many years,
and pull all these crores of people out of poverty.
To the educated youth who are the readers of this booklet, all these
figures must be very surprising, unbelievable. They are daily fed stories in
classrooms, in intellectual seminars, in the media, about how India’s high
growth rates are gradually eliminating poverty and how India is entering a
new age of unlimited prosperity.
Friends, the truth is, globalization has resulted in obscene inequality
in the distribution of wealth and income: at one extreme, it has led to the
sprouting of a handful of huge fortunes, and at the other, it has led to
deepening and extension of grinding poverty.
To understand why this is happening, it is necessary to start from
the beginnning…
December, 2008
***
Part I
WHY GLOBALISATION?
The Nehruvian Model
Nehru indulged in a lot of rhetoric about socialism. But the
development model implemented in India under his leadership was
essentially a model of capitalist development. Its most essential
Lokayat
5
features – the public sector and the private sector, the Industrial Policy
Resolutions of 1948 & 1956 – were based on an economic plan
proposed by a committee set up by the
Indian capitalists themselves. The
architects of this proposal that popularly
came to be known as the Bombay Plan
were the doyens of Indian industry,
J. R. D. Tata and G. D. Birla.
After winning independence, the Indian capitalist class was keen to
duplicate the industrial revolution of the developed capitalist countries,
and that too, at an accelerated speed. But, in 1947, the Indian capitalists
had neither the capital nor the technology needed to set up the massive
infrastructural industries essential for rapid industrialization. Furthermore,
while the gestation period for projects in the infrastructural sector was
long, returns on investment in these sectors were very low. Hence the
Indian capitalist classes recommended to Nehru that large scale projects
in energy, transportation, steel, oil, telecom and other infrastructural areas
be set up in the public sector, using the hard earned savings of the people
and by burdening them with indirect taxes. The Indian capitalist class
invested its capital in the consumer goods industries where there were
quick profits to be made. Even here, a major part of the financing was
done by the public sector financial institutions, while the running of the
industry and siphoning off of the profits was left in the hands of the Indian
capitalists. Till the late 1970s, the total assets of many of India’s biggest
industrialists – including luminaries like Tatas, Birlas, Mafatlals &
Singhanias – in the total assets of the companies they controlled was less
that one percent!10
Apart from setting up public sector units and providing finance to
the private sector, the Indian state intervened in the economy in many
other ways – to ration scarce resources and direct them to planned uses,
curb the power of monopoly houses and promote small scale industry, and
so on. It also actively intervened to limit the penetration and
influence of foreign capital. For instance, MNCs were not allowed to
enter strategic sectors of the economy. Even in the areas where they
could invest, restrictions were imposed on the quantum of investments
and conditions were imposed on profit repatriations.
Note that in adopting this path of capitalist development, India was
only duplicating the strategy adopted by the developed capitalist countries
6
India becoming a colony again...
in the 18th and 19th centuries. For instance, the US government actively
intervened to protect its infant industry from foreign competition after
winning independence from England;11 Germany did the same when it
began its industrial revolution in end-19th century.12 Not just India, but
many other third world countries that became free from colonial rule in
the years after the Second World War attempted to follow a similar path
of autonomous capitalist development.
Reasons for its Failure
However, there are inherent limitations to capitalist development in
a third world country like India. Duplicating the industrial revolutions of
the West was simply not possible for them. The developed capitalist
countries had got the huge amount of capital needed to finance their
industrial revolutions by looting and plundering the third world which they
had colonized. And when their industrial revolutions took off, these same
colonies also provided them with the huge quantities of raw materials as
well as the markets needed for their industrial revolutions to continue
without interruption.13
On the other hand, when the underdeveloped countries attempted to
carry out their industrial revolutions duplicating the Western capitalist model,
they had no region to plunder to finance their industrial revolutions. On top
of it, their own economies were totally devastated due to centuries of
colonial plunder. Not just devastated, but crippled too, due to the policies
of the colonial rulers.14 Therefore, it wouldn’t be an exaggeration to say
that the third world capitalist development models were doomed to fail.
And this is precisely what happened. By the 1970s, the autonomous capitalist
development models of most third world countries had become crisisridden. To keep their economies going, they now resorted to increased
foreign borrowings. By end-1980s, more than 70 third world countries had
become so mired in foreign debt that they were forced to declare
bankruptcy.15 Pushed by their foreign creditors, they now began the
globalization of their economies. The Indian economy got trapped in a
similar foreign exchange crisis by end-1990 – we discuss it in greater
detail in the next section.
Even within these limitations, the limited capitalist development
possible in India was throttled due to Nehru’s failure to carry out radical
land reforms. While a lot of emphasis was laid on setting up huge industries,
the agriculture sector was neglected. Land reforms, development of agroLokayat
7
based industries, building a cooperative movement – could have brought
some prosperity to crores of rural poor. But this was done only to a very
limited extent and that too only in some parts of the country. No serious
attempt was made to eliminate medieval backwardness – religious
backwardness, casteism, patriarchy continued to hobble the creative power
of the masses. As a result, the purchasing power of more than 70% of the
population living in the rural areas remained undeveloped. And without the
growth of a domestic market, industrial development was bound to get
bogged down. In less than two decades the Nehruvian Model became
crisis-ridden. Nehru himself admitted the failures of his policies in
Parliament a few years before his death.
Entrapped in Debt
To keep the economy going, the
Government of India resorted to increased
external borrowings in the 1980s. It also
opened up the economy to a limited extent
to imports and foreign investment.
Consequently, the external debt of India went
up by more than 4 times in just a decade –
from $20.6 billion in 1980 to $83.7 billion in
1990.16
[Note: Here, it would be appropriate to point out an important
economic fact which most people are unaware of. There is a difference
between internal and external debt. A government can repay an
internal debt by increasing taxes on its people. However, if a third
world government like India borrows in, say, dollars from abroad, it
cannot repay the loan from its tax income as it has to repay the loan
in dollars. And it cannot print dollars. The only way it can repay this
foreign loan is from its export income, or earnings from foreign tourists
to India who bring in dollars, or from remittances from Indian workers
abroad who send in dollars. And when these earnings are not enough,
by taking still more loans.]
And so, by the late 1980s, the Indian economy was caught in a debt
trap: we were borrowing from abroad to pay even the service charges on
our previous debt.
The developed capitalist countries, who not very long ago were the
imperial masters of the entire third world, were looking for just such an
8
India becoming a colony again...
opportunity. They had been forced to
retreat and grant independence to India
and other third world countries due to their
powerful independence struggles. Since
then, they had always been looking for
alternate ways to bring the former colonial
world back under their hegemony,
ensnare it once again in the imperialist
network, so that they could once again
control its raw material resources and
exploit its markets. They now sensed that the time was opportune to force
the government of India to submit to a restructuring of the Indian economy
and open it up to foreign capital flows and imports. The World Bank, an
international financial institution which is decisively controlled by the US
and West European countries, submitted a memorandum to the Indian
government in November 1990 ‘suggesting’ economic reforms like opening
up the economy to foreign investment, liberalizing trade, privatization of
the public sector, reforming the financial sector, and so on. Simultaneously,
the Western creditors put on hold fresh loans to the Indian government,
demanding that it first implement these policy changes.17
structural crisis. The capitalist classes now
came to the conclusion that in order to
expand their profit accumulation, they must
abandon their dream of independent
capitalist development and become active
collaborators of the imperialists.
Accepting the conditions of the World Bank
(WB) and the International Monetary Fund
(IMF), they decided to dismantle the
Nehruvian Model, and open up the economy
to inflows of foreign capital and goods.
With foreign loans drying up, the foreign exchange reserves of the
country plummeted to just $1.2 billion on December 31, 1990.18 By early
1991, the Indian government was entrapped in a situation wherein, if it
wanted to avoid external account bankruptcy, it had no option but to accept
the demands of its international creditors.
2. Removal of all restrictions on foreign investment in industry, financial
sector and agriculture.
Globalization Begins…
The Nehruvian Model of capitalist development sharply polarised
Indian society. Society split into two camps. In one camp were the
capitalists, big farmers, big traders, politicians, bureaucrats,
blackmarketeers, smugglers, mafia, dealers, distributors, etc. – the
parasites. They comprised less than 5% of the population. In the other
camp were the working people, the students and youth, the pro-people
intellectuals – the ordinary folk. These were 95% of the population. It is
the first camp which controls political power in the country. All political
parties serve only its interests.
By the early 1990s, the path of relatively autonomous capitalist
development chosen by the Indian ruling classes was beset with severe
Lokayat
9
Elections to the Indian Parliament were held in May 1991. In July
1991, the minority Congress government of Narasimha Rao-Manmohan
Singh came to power at the Centre. It immediately went in for a ‘Structural
Adjustment Loan’ from the WB-IMF. In return for this loan, it signed an
agreement with the World Bank pledging a thoroughgoing restructuring of
the Indian economy. The main elements of this Structural Adjustment
Package accepted by the Government of India are:
1. Removal of all curbs on imports and exports.
3. Opening up the stock markets to foreign speculative capital flows.
4. No government interference in the operation of ‘Free Markets’: ending
of all subsidies to the poor including food, health and education subsidies;
privatisation of the public sector, including essential services like drinking
water, health, education; removal of all government controls on
profiteering, even in areas like foodgrains.
It is this ‘restructuring’ of the Indian economy at the behest of
the country’s foreign creditors that has been given the high sounding
name, GLOBALISATION.
The opposition parties initially opposed the economic reforms. In
the next elections, when they came to power, they further accelerated the
reforms. The behaviour of the various political parties, both at Centre and
in the states, has made it very evident that all of them are in agreement as
regards these economic reforms. The capitalist classes, their lackey
intellectuals, their propaganda machinery, that is, the media, have been
10
India becoming a colony again...
fully supportive of these policies. Globalisation is the consensus policy of
the entire Indian ruling class. And so, ever since 1991, while governments
have kept changing at the centre, the globalization of the Indian economy
has continued unabated.
Globalisation: For Whose Benefit?
The Indian elites are euphoric about globalization. Foreign capital is
entering each and every sector of the Indian economy – from infrastructural
and consumer goods industries to the service sector. Some Indian capitalists
have become their junior collaborators in these industries. Others have
benefited through contracts, dealerships, and agencies. The public sector
corporations created through the sweat and toil of the common people are
being privatized at throwaway prices. Some of these are also falling into
the lap of our domestic capitalists. All essential services – including
education, health, electricity, transport, even drinking water – are being
privatized, and all controls on profiteering are being removed. Because
these are essential services, the profits are huge. The Indian elites are
now no longer worried about the long term growth prospects of the economy.
They are only interested in filling their coffers.
The giant corporations – Indian and
foreign – are on a no-holds barred looting
spree. They are plundering mountains, rivers,
forests for their immense natural wealth. The
government has given them permission to
take control of thousands of acres of land,
shoo off the people living on these lands for
centuries, and do what they want – indulge
in indiscriminate mining, or set up giant
polluting factories, or golf courses, or
residential complexes.
Hoarders and blackmarketeers are having a field day – as laws
controlling their activities have been relaxed in the name of freeing the
markets. The speculators are ecstatic – they have never had it so good.
The swanky upper middle classes are also in raptures over globalization –
the world’s most trendy consumer brands are now available in the country.
They can now eat what the Americans eat, drink what Americans drink,
even wear the same underwear as they do! So they proclaim – India is
catching up with America. Hip, hip, hurrah!
Lokayat
11
The top Indian intellectuals and the media – faithful servants of the
capitalist classes – have launched a massive propaganda offensive to
convince the Indian people about the benefits of globalization. The entry
of foreign companies into India and the total volume of foreign capital
inflows is being presented as a barometer of the development of the country.
They claim that the entry of MNCs into India will help Indian industry
become more competitive and world-class. Prices will fall. With MNCs
creating millions of jobs for the unemployed, unemployment and poverty
will gradually end. India’s high GDP growth rates prove the country is on
its way to becoming an economic superpower.
One wonders why we drove them away in the first place (in 1947)!
Gandhi, Subhash Bose, Bhagat Singh must surely have been ill-informed
about the benefits they bring!!
Before we examine what is happening to the Indian economy and
the common people under globalization, let us briefly take a look at some
of the myths being propagated about the benefits of foreign capital inflows,
also known as FDI (foreign direct investment).
Part II
MYTHS ABOUT BENEFITS OF FDI INFLOWS
(i) Will the competitiveness of Indian industry increase?
It is not possible for even the biggest Indian companies to
compete with the gigantic MNCs – the MNCs are just too big. Just the
top 200 MNCs control well over a quarter of the world’s economic
activity.19 They are so big that they can gobble up entire countries. Wall
Mart, the retailing giant, is bigger than 161 countries. Mitsubishi is larger
than Indonesia; Ford is bigger than South Africa. Of the 100 largest
economies in the world, 51 are corporations, only 49 are countries.20
Obviously, there can no competition with these giants, only
collaboration. This is what has been happening in India too. The bigger
Indian companies are moving towards becoming the junior collaborators
of the MNCs, while small scale industries have been downing their shutters
in tens of thousands.
12
India becoming a colony again...
(ii) Will prices fall?
In classrooms, economic courses still teach that competition leads
to falling prices as firms indulge in cost cutting. But that used to take place
in the era of ‘free’ or small scale capitalism, when there were thousands
of small firms indulging in cut-throat competition with each other to survive.
Monopolies do not function under these laws.
Today, a handful of giant MNCs control global production in virtually
every sector. The top five firms account for between 30-60% of the global
sales in autos, electronics, airlines, steel, oil, personal computers and
chemicals21; in pharmaceuticals, the top seven firms account for a quarter
of the global market22; just six agro-chemical corporations dominate the
global genetically engineered food industry23; and so on.
Since they are so few in number, they follow the unwritten rule of
not indulging in price competition – it would be ruinous for all of them,
because they are so big. Instead, they collaborate to rig up prices.
Competition among them now takes place over market shares. They
compete with each other using aggressive marketing techniques: since
profits are huge because of high prices, they can afford to spend billions
of dollars on advertising.24 A simple example to illustrate this is the soft
drinks sector, where the two soft drink giants Coke and Pepsi, having
taken over most of their rivals, dominate the Indian soft drink industry.
They do not indulge in price warfare. Instead they cooperate to keep
prices high and sell a bottle containing 300 ml of coloured water laced
with deadly chemicals costing a few paise for Rs.10. They now compete
with each other for market shares – one hires Shah Rukh Khan, the other
Sachin Tendulkar.
(iii) Will MNCs create jobs?
This is one of the biggest myths about globalization, that the entry of
MNCs into the Indian economy would lead to enormous job creation and
reduce unemployment. The reality is the exact opposite.
MNCs create very few jobs. The reason is simple: they use the
latest technologies, and so with a very small workforce, they are able to
produce an enormous amount of goods and dominate the global market.
According to a UN report, the total number of people directly employed
by MNCs in the entire third world is just 70 lakhs. (An equal number are
employed indirectly.)25 70 lakhs is less than the annual fresh entrants into
Lokayat
13
the Indian labour market! This explains why, despite all the high expectations
generated by the entry of MNCs into India, they have created very few
jobs. Of these, a few are highly paid jobs. The media has been highlighting
these extremely few jobs, creating an impression even amongst the common
people that globalization is going to solve our unemployment problem.
While MNCs employ very few people both directly and indirectly,
they destroy many more jobs than they create – due to closure of small
scale industries, destruction of agriculture, and so on. As we shall see
later in this booklet, the unemployment situation in India has been worsening
since the past decade.
(iv) Then, what do MNCs do?
If MNCs don’t create jobs, if
MNCs don’t reduce prices, then how do
they benefit society? The true answer
will be shocking for those who uncritically
accept the propaganda dished out daily
by the newspapers and TV Channels:
they don’t benefit us in any way.
Their sole aim is to make profits.
And what else do they do? They bombard us with advertisements to
convince us to buy more goods, so that they can make more profits. They
actually make super-profits, because as mentioned earlier, they collaborate
to rig up prices.
Hence the obsession with growth in a monopoly capitalist economy.
GDP growth represents the increase in goods and services sold over the
previous year, and so it reflects the increase in profits of the capitalist
class. However, unlike in an economy dominated by small scale capitalism,
growth in an economy dominated by monopolies does not trickle down.
The increase in profits of the giant corporations does not benefit us, the
working people, in any way.
No trickle down in the developed countries
Unlike the impression created by apologists for monopoly capitalism,
growth in an economy dominated by multinational corporations does not
trickle down. This is not happening in the developed countries too. For
instance, in the USA, since the 1970s an overwhelming proportion of the
14
India becoming a colony again...
income gains have been cornered by the super-rich, with hardly any gains
for the middle and low income households.
MNCs seek to dominate the world
There is nothing surprising in this; it
could only have been so. The logic behind
the operation of the MNCs today is the same
as it was in early 20th century, when they
and their concubine governments raced with
each other to colonise the third world:
a) The MNCs are giant corporations, and
have an enormous capacity for
production. Therefore, they also need huge quantities of raw materials.
Many important raw material sources are in the third world. And so, in
a world where their competitors are equally big and tough, they require
to gain control over as much sources of raw materials as possible,
wherever these raw materials may be. And of course, they want to
take control of these raw materials at the lowest possible price.
As the above chart shows, during the period 1979-2004, the average
real after-tax income of the top one percent of the population in the USA
nearly tripled, rising by $554,000, or 176%; in contrast, the average real
after-tax income of the middle fifth of the population rose a relatively
modest 21 percent, or $8,500; and that of the poorest fifth of the population
rose just 6 percent, or $800.26
No trickle down in the third world countries
So far as the ex-colonial countries (who are also given the exalted
name of ‘developing countries’) are concerned, once they open their
economies to the MNCs, these giant corporations
simply plunder them. A massive tragedy – of
poverty, unemployment, disease, destitution – is
being wrought across all these countries. In Latin
America, the impact of globalization has been so
severe that all the gains made by the people during
the 1960s and 1970s had been wiped out by the
1990s. Africa has been squeezed dry like a lemon.
The continent has become so marginalised that
the only image of Africa left in the eyes of people
all over the world is of a continent of starving
people.27
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15
b) The monopoly corporations, ever since their birth, have always sought
to conquer foreign markets. They produce an enormous quantity of
goods, and unless they are able to sell them, they will not be able to
reinvest and sustain their growth rate.
c) The MNCs also need foreign markets for capital investment. In a world
where giant corporations are competing with each other, they race with
each other to enter new markets so that they can quickly dominate
them and make it difficult for their competitors to enter.
Monopoly corporations began to emerge in the developed capitalist
countries around the 1870s.28 From that very moment, a mad rush began
among these countries to carve up those areas of the world that had not
yet been colonized. By 1914, the colonial powers directly controlled 85%
of the earth’s surface, and their economic and political control extended
over almost the entire globe. After they had colonized all those lands that
could have been colonized, they fought two World Wars for re-division of
their colonies. Because of this change in their nature (from small scale
capitalism to an economy dominated by monopolies) which made them
even fight fierce wars with each other in order to dominate the world, the
developed capitalist countries – the United States of America, the West
European countries, and Japan – now also came to be known as imperialist
countries.
16
India becoming a colony again...
However, after the Second World War, a new player emerged on
the world scene to spoil the games of the imperialists. The people of the
colonies rose up in revolt, and the colonial powers were forced to retreat
and give freedom to their colonies.
It is in the very nature of imperialism to seek to dominate the world.
The US emerged as the dominant imperialist power after the Second World
War. And so, right from the very beginning, it tried to sabotage the
independent development of the third world countries. It used all kinds of
tricks to re-enter the economies of these countries and dominate them,
and keep their markets open for trade and capital investment by Western
multinational corporations. Thus, it used various so-called foreign aid
programs, and controls exercised by international organizations such as
the World Bank and the International Monetary Fund. And when these
did not work, it got the CIA to overthrow governments not willing to become
American puppets, from the Mossadeh government in Iran in 1953 to
Allende in Chile in 1973. Where necessary (and possible), it sent in its
troops to remove governments seeking to pursue an independent path of
development, from Vietnam and Korea to Brazil, Guatemala and Dominican
Republic. Hundreds of thousands of people in these countries were killed
by US troops and their local collaborators.29
In the early 1980s, the third world countries became entrapped in a
foreign debt crisis. By 1982, the total debt owed by third world countries
to US, European and Japanese banks had climbed to an astronomical
$785 billion. That year, 22 third world countries declared bankruptcy and
approached the WB-IMF for loans to tide over the crisis.30
The wheel had now come full circle for the third world countries.
The imperialist countries were now in a position
to re-establish their hegemony over the third
world, without resorting to force. Using their
control over the WB-IMF, they arm-twisted
these countries to open up their economies to
foreign capital and goods, and remove all
restrictions placed on their operations. This is
the real content of globalization. As Henry
Kissinger, former Secretary of State of the
USA, candidly remarked in a speech in 1999,
“Globalization is only another word for U.S.
domination.” 31
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17
Part III
IMPACT OF GLOBALISATION
ON INDIA’S FOREX CRISIS
We now take a look at the impact of the most important elements of
globalization – which as discussed earlier are actually conditionalities
imposed by the World Bank-IMF on India – on the country’s foreign
exchange (forex) situation. After all, it was because of our forex crisis
that globalization began.
(i) FREE TRADE
According to World Bank theory, entry of foreign companies and
liberalization of foreign trade will enable India to diversify its economy
and thereby export a wide range of goods – this will enable India to
increase exports in a big way and thus repay its foreign debt.
That this theory is all hogwash can be understood by commonsense
logic. MNCs already have production facilities in the developed countries.
Not just that, the bigger MNCs also have production facilities around the
world to cater to various regional markets. In such a situation, why should
a MNC come to India and set up a manufacturing unit here to export
goods to the developed countries to compete with goods made by the
same MNC in those countries? (Of course, some MNCs may set up
manufacturing facilities here for export purposes taking advantage of the
cheap labour here, but these would be few.)
Even more childish is the expectation that MNCs will help Indian
industries increase their technological capabilities by transferring
technology, enabling export diversification. MNCs are not social workers;
capitalism knows no such cooperation, its mantra is ‘cut-throat’
competition.
The Real Reason behind ‘Free Trade’: Stagnation in the West
The reason why the developed countries arm-twisted the Indian
government to open up its domestic market for foreign capital and goods
can be understood by some simple economic facts. The economies of the
developed countries have been slowing down since the 1970s. The average
economic growth rate of the G-7 countries (that is, the seven most
18
India becoming a colony again...
developed countries) fell from 3.5% in the 1970s to 2.1% in the 1990s.32
Their economies are saturated; the massive amount of capital accumulated
by their MNCs is finding no investment outlets in their economies. Already,
investment has far outstripped demand. For instance, in the US, the
corporations have over-invested so much that the percentage of production
facilities that are currently being utilized (called the capacity utilization
rate) is at its lowest levels since the Second World War. Presently, it is at
a dismal 78% (in 2008).33 And so, the MNCs are coming to India mainly
for the domestic market, not for exporting from India to the saturated
markets of the developed countries (there may be some exceptions).
There is nothing like a ‘free market’ actually. It is all bunkum. While
the developed countries have been vociferously preaching the ‘free market’
gospel to third world countries like India, they themselves have been
imposing all kinds of restrictions on low-cost imports from these
underdeveloped countries to protect their markets for domestic suppliers.
According to the UNCTAD (a UN agency), the ‘developing’ countries
are losing export earnings to the tune of hundreds of billions of dollars
every year due to protectionism in the developed countries.34
Given this structure of the world economy, there are limits to the
growth of exports from India. On the other hand, given the insatiable
appetites of the Indian elites, with import liberalization imports into India
have zoomed. A major reason for the rise in India’s import bill is the sharp
rise in luxury goods imports, especially electronic items, and gold imports.
With the Indian capitalist class now abandoning all attempts at independent
capitalist development, imports of machinery have also risen sharply. Finally,
despite high oil prices, no steps have been taken by the Indian government
to curb oil consumption, and so the oil import bill has shot up.35 Much of
the growth in oil consumption is on account of the great boom in private
automobiles. This could have been curbed by proper planning, promoting
growth of public transport and discouraging use of private vehicles – by
increasing taxes, imposing high parking charges, and other such measures.
In direct contrast, the government has actually promoted sales of cars by
providing cheap car loans and huge subsidies to car manufacturers and
car owners, and allowing public transport systems to decay.
And so, the Trade Deficit zooms…
In accordance with WB prescriptions, the Indian government has
removed all restrictions on imports. Simultaneously, it is desperately
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19
promoting exports. Thousands of crores of rupees have been given as
subsidies to exporters. While it has resulted in some diversification and
increase of exports, because of all the reasons mentioned above, imports
have increased much more sharply. The result has been that the trade
deficit has simply gone through the roof. From $2.8 billion in 199192 and $4.05 billion in 1993-94, it shot up to a whopping $90 billion
in 2007-08. 36
Despite this huge trade deficit, the difference between our day-today foreign exchange expenditures and earnings (called balance of
payments on current account) has remained at reasonable levels for
two reasons. First, the huge success recorded by India’s exports of software
and IT-enabled services. Second, the large remittances into the country
from Indian workers abroad. It is these foreign exchange earnings through
the globalization years that have prevented the Indian economy from sliding
into foreign account bankruptcy once again. Given the present global
economic crisis, how long these inflows can continue is a matter of serious
doubt. We come back to this later in this booklet.
Because of the continuing deficit in balance of payments on current
account, foreign borrowings have continued. As a
result, the country’s external debt has zoomed
upwards, and, stood at an astronomical $221.2
billion as on March 2008 (figure includes both
government and non-government debt).37 While the
Indian economy has not collapsed into foreign
exchange bankruptcy again due to the willingness of
the foreign creditors to lend, in reality, the foreign
exchange crisis of India is actually worse than in 1991.
(But then what about India’s huge foreign exchange reserves? It’s
like the golden deer Marich of Ramayana. More on it later.)
(ii) FREE INVESTMENT:
OPENING THE ECONOMY TO FDI FLOWS
This brings us to the second conditionality imposed by India’s foreign
creditors. As per the wishes of the WB, India’s rulers have opened up the
economy to foreign investors. These foreign capital inflows are being
used to partly finance the balance of payments deficit of the country
(otherwise, the foreign debt would have risen even faster.)
20
India becoming a colony again...
But just as interest has to paid on loans, foreign investment results in
profit outflows. The rate of return on foreign investment can be as much
as 20-22%, as admitted even by S. Venkitaraman, a former governor of
the RBI38 (it is actually much more than this, as per statistics put out by
the RBI39)! Which means that the forex drain due to FDI is much more
than that due to foreign loans!! Foreign loans lead to yet more loans and
eventually into a debt trap; similarly, FDI also is addictive: the more FDI
you invite, the more FDI you need to compensate for the increasing profit
outflows.
Part IV
And so, our country has become an international beggar. Our PM
and CMs are hopping from Washington to Bonn to Tokyo, begging foreign
investors to bring their billions into the country.
(i) PRIVATISATION OF THE PUBLIC SECTOR
Consequences of ‘FDI-Inflow Profit-Outflow’ Trap
‘Free Trade’ has resulted in a monstrous widening of the trade deficit.
‘Free Investment’ is resulting in a huge outflow of profits. As the country’s
foreign exchange crisis worsens, the only way the economy can be kept
afloat is by luring more and more foreign investors to bring their dollars
into the country. And so, irrespective of their colour – white, saffron,
blue, green, red – governments at the Centre and the States have been
offering the most extraordinary sops to foreign investors. The country’s
infrastructural assets, agricultural wealth, mineral resources, everything
has been put for ‘SALE’ at rock-bottom prices.
The imperialists know no mercy. They are imposing the most
humiliating conditions on us – they are trampling all over our sovereignty
with impunity. Our foreign policy is now oriented to suit their interests.
Our economic policy, including our budget, is now made by World Bank
men: since 1991, most of the influential economic policy makers in India,
including members of the Planning Commission, secretaries of the Finance
Ministry and economic advisors to the government have been people who
have had stints at the World Bank; the czar of our economic policy, Montek
Singh Ahluwalia, spent the first 11 years of his career at the World Bank.40
We are forced to sign the most blatantly unequal treaties that sanctify the
domination of the imperialists over the world. Our defence policy is being
reoriented to serve America’s hegemonic interests in this region. Since no
new nuclear power plants have been ordered in the US for the last 30
years due to public opposition and high costs, we are now providing their
industry a lifeline by allowing them to set up nuclear plants in India.
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21
Let us take a look at the impact of these conditionalities on the most
important sectors of the Indian economy.
IMPACT OF GLOBALISATION
ON THE INDIAN ECONOMY
Most of the country’s infrastructure was in the public sector until
1991. Now the government is privatizing it. Privatisation of the public
sector is one of the most important conditionalities attached to World Bank’s
Structural Adjustment Loans.
The Propaganda
Dutifully, the bards who are supposed to be economists have launched
a propaganda offensive – the public sector is being privatized because it
was making huge losses. But the public sector companies that are
preferentially being privatized are the profit making ones, like the VSNL,
GAIL, the telecom companies (MTNL, BSNL), and the highly profitable
insurance companies and oil companies!
This is not to say that no public sector companies were making
losses – many are in the red. But this is not because the public sector is
inherently inefficient as is argued by the ‘free-marketeers’, but because it
is used as a milking cow by the politicians and the bureaucrats. More
importantly, the government has always run it in such a way so as to
maximise private sector profits.
This is best illustrated by the favourite whipping boy of the
‘privatization pundits’: the State Electricity Boards. One reason for their
losses is that the electricity prices were deliberately kept low – now that
they are being privatized, the electricity prices are being hiked by as much
as 2 to 3 times, so that the private sector can mint money. The second
reason is that the biggest consumers, the state governments and the big
industrialists, simply did not pay their electricity bills.41 Finally, corruption
of the ministers and bureaucrats added to the woes of the State Electricity
22
India becoming a colony again...
Boards. If privatization is the solution to corruption, then it is actually the
ministries and the bureaucracy that should be privatized!
All this is not to argue that there is no inefficiency or corruption at
the lower levels in the public sector. It would actually be surprising if there
wasn’t! There is little moral incentive for an ordinary employee to be
honest and efficient and hardworking in a country where the top leaders
are implicated in scams to the tune of thousands of crores of rupees, and
yet are able to twist the judiciary and police around their fingers and walk
away scot-free. We only want to argue that the real motive of the advocates
of privatization is not to eliminate corruption or inefficiency in the public
sector, but to transfer public assets to the private sector.
Privatisation – at Firesale Prices!
The foreign brigands want to take control of the ‘commanding heights’
of the Indian industry. The Indian corporate houses are also getting a
share of the pickings. At the time of independence, the Indian capitalists
had no money to invest in infrastructure, so they themselves recommended
that this be set up in the public sector. Now they have become big and are
ready to invest in this sector.
The country’s rulers, the political parties
and the bureaucracy, are revealing their true
colours: that they are only frontmen for the big
private corporations. Not only are the country’s
public sector assets, built out of blood and sweat
of the common people over 50 years, being
privatized, they are being handed over to the
profiteers at virtually throwaway prices. To give
just two head-spinning examples:
• Balco, the giant public sector aluminium producer, whose asset value
was Rs.5000 crores, was handed over to Sterlite, a company notorious for
its environmental abuses and bad safety record, for just Rs.550 crores –
an amount less than half the value of Balco’s captive power plant alone!42
• VSNL, the telecommunication company, was taken over by the Tatas
for just Rs.2591 crores, an amount which was less than even VSNL’s
cash reserves of Rs.3000 crores. With prime properties in all major cities,
the actually worth of VSNL would be many thousands of crores of rupees
more. On top of it, even this money spent by Tatas to acquire VSNL was
loaned to it by public sector financial institutions!!43
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23
Private Monopoly Super-Profits
The ‘free-marketeers’ claim that the public sector was making losses
because of its monopoly nature – since it is backed by the government, it
is not subject to market laws and does not have to face competition. But
they have no problems when this is converted into a private sector monopoly
and now makes super-profits!
Actually, many infrastructural sectors can only be monopolies,
because of the huge investment involved. For instance, setting up electricity
distribution networks, or building railways and expressways is so expensive
that if for the sake of competition, two parallel electricity distribution
networks were set up in a city, or two rail lines or expressways were built
between two cities, the costs to the consumers would become so
prohibitively high that all the competing companies would go bankrupt.
Which is why, wherever in India electricity distribution has been privatized,
it has been handed over to a single private company – from being a public
sector monopoly, it has become a private sector monopoly. Similarly, all
expressways being built in the private sector are private monopolies.
Actually this is why these areas are being privatized – so that the private
sector can make exorbitant, monopoly profits.
Secondly, even where competition is possible, like in steel
manufacture, or insurance, or mining, or electricity generation, the big
corporations that are taking over public sector units in these areas do not
indulge in price competition. On the contrary, these big private corporations
are cartelizing to jack up prices and earn superprofits.
This is precisely what is happening in the case of electricity
generation privatization in India. The foreign and Indian power producers
have cartelized and sent electricity prices zooming skywards. Having
dismantled its plans for setting up power plants and hence facing an
electricity shortage, the Maharashtra State Electricity Board (MSEB) is
being forced to buy power from these companies at prices as high as Rs.8
to 10 a unit!44
In the case of cement and steel, the big corporations that dominate
production in these sectors have in recent years cartelised to raise prices
so exorbitantly that it made newspaper headlines; even the normally docile
Finance Minister was forced to express concern.45
24
India becoming a colony again...
(ii) THE BOOM IN THE PRIVATE CORPORATE SECTOR
With the government not just turning a blind eye but on the contrary
nakedly supporting their profiteering, the foreign corporations and their
Indian collaborators are having a gala time. The spectacular growth of the
economy of above 8% over the last five years, 2003-04 to 2007-08, is
actually almost entirely a reflection of the growth of the private corporate
sector.
But considering that the government has taken no measures to
increase the purchasing power of the vast majority of the population who
are living in abysmal levels of poverty, where is the demand coming from?
Does this growth in any way reflect a growth of the entire economy? We
take a look at the various measures taken by the ‘government of the
upper classes of India’ to promote GDP growth.
a) Promoting distorted development
In the economics promoted by Milton Friedman and other quislings
of the MNCs and dutifully adhered to by their Indian surrogates, rise in
profits of the big corporations is good for the economy. Corporations can
only earn profits if they are able to sell their goods. As discussed in Section
(IV ii c) later, only a very narrow section of the Indian population constitutes
the market for big corporations, only it has the purchasing power to buy
their goods. Therefore, the Indian government is promoting the kinkiest
kinds of industries to boost the profits of the big business houses, with
absolutely no concern for their consequences on the common people.
Luxury industries: There has been an
explosive growth in luxury consumption
industries – airlines, automobiles, high-end
mobile instruments and services, a multitude
of other electronic gadgets, furnishings,
designer clothing, malls, five-star restaurants
and hotels, jewellery, art galleries. Sales of
super luxury industries meant exclusively for
the Richie Rich – private jets costing $ 20-50 million each, luxury cars
costing Rs. 2-50 million each, exclusive residential complexes, and so on –
have also shot up.
Medical tourism: Corporate hospitals oriented towards providing fivestar treatment to foreign citizens have mushroomed. More than 1.75 lakh
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25
medical tourists visited India in 2005; according to a CII report, this industry
could soon be worth Rs.23,000 crores. Recently, the dental tourism industry
has also started growing.46
Clinical research: Multinational companies are versatile; they have found
a way in which the Indian poor can contribute to India’s economic boom –
by hiring out their bodies for trials of new drugs. The government has
given the go ahead for transforming India into the world’s largest clinical
Petri-dish, it is also giving this industry tax exemption. 47 Life in India
comes cheap; even if the drug trial fails and the patient falls sick or even
dies, hardly any compensation needs to be paid; the consulting firm AT
Kearney actually says that India is a preferred destination for outsourcing
of clinical trials for the pharma industry because of the naivety of its
people! Multinational pharma companies are hoping to save as much
60% of the costs by offshoring clinical trials to India, and so MNCs are
rushing in.48 A leading consulting firm to the health care industry is expecting
an investment of $2 billion in this sector by 2010.49
Robber capitalism: The tribal districts of
the states of Orissa, Jharkhand and
Chattisgarh are home to much of the country’s
forests and minerals. A fascist reign of terror
has been unleashed on the people of these
states, in order to drive out the people and
seize control of their lands, cut down the
forests, and hand over tens of thousands of
acres of land to foreign and Indian
corporations to set up mining projects, and
huge steel and aluminum plants. Real estate
speculators are also participating in this huge land grab to set up IT parks,
golf courses and five star hotels. Investments to the tune of lakhs of crores
of rupees are expected into these poor rich states.
Urban Real Estate: The country has the potential of attracting billions of
dollars of FDI for setting up hotels, airports, malls, and other urban
infrastructure in its urban areas – profits are huge, the growth of real
estate rentals in many Indian metro cities was among the fastest in the
world. US financial companies have already shown keen interest to invest
in this sector. A case in point is Mumbai. The US consultancy firm
McKinsey has recommended that the city has the potential of becoming
an international financial centre if sweeping changes are made in the city’s
26
India becoming a colony again...
infrastructure.50 But for that, land is needed. Where does that come from?
The palatial houses of the rich cannot be touched. The only alternative is
to evict the poor from the slums, which occupy a considerable portion of
Mumbai’s land. The poor are expendable – they do not consume much,
and so do not contribute to the country’s growth rate. And so they are
being bulldozed out. The city is now being reserved for the stinking rich.
Special Economic Zones (SEZs):
These are simply scandalous. In the name of providing an
‘internationally competitive business environment’, investors in the SEZs
are being given the most amazing concessions: no import duties; no controls
on imports and profit repatriations; 100% tax holiday for 5-10 years;
permission to set up hotels, residential complexes, malls, golf courses, etc.
on as much as 75% of the SEZ area. 51 The government has gone to the
extent of shamelessly declaring that these areas will be considered as
foreign territories for the purpose of trade operations, duties and tariffs
– the foreigners now no longer have to come with arms to win trade
concessions! According to the Finance Ministry, the revenue loss due to
these tax concessions is going to be 90,000 crores over the next four
years alone!!
Labour laws and environmental laws will not be applicable to these
zones. The Development Commissioner of the SEZ will function like a
virtual dictator of the area 52 – Indian democracy will end at the border of
these zones!
It is “one of the greatest land grabs in modern Indian history,” says
Sumit Sarkar, an eminent historian and writer, who recently retired from
Delhi University. “India has never before witnessed the transfer of
hundreds of thousands of hectares of agricultural
land to private industry. Nor probably has any
other developing country.”53 Till recently, even
the land for these SEZs was forcibly being
acquired by the government from the local
farmers by paying them a fraction of the market
price – till the heroic struggle of the Nandigram
peasants forced it to modify its land acquisition
policy.
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27
b) Outright transfer of public funds to the Private Sector
The political parties have given up all pretense of ruling the country
on behalf of the entire population. They are openly running the economy
for the benefit of the big corporate houses. We have seen above that they
are handing over control of public sector enterprises to these corporations
at throwaway prices. The government has deliberately pushed the public
sector banks into doling out thousands of crores of rupees of credit to the
upper classes to fuel a consumption and housing boom. The poor are
being evicted at government costs so that the rich can invest in real estate.
Entire villages are being uprooted by government funded goons so that
corporations can extract the mineral resources below their lands.
The ‘Ministry for Transferring Public Wealth to the Corporate Sector’
(also known as the Finance Ministry) keeps coming up with ever more
innovative methods of doing its job well.
The simplest way is giving it direct subsidies. Of course, since
subsidies are supposed to be given only to the poor, the subsidies to the
rich are called ‘incentives’. For instance, subsidies to exporters are called
‘Export promotion schemes’: in 2005-06, they amounted to Rs. 40,000
crore rupees.54 Corporate houses are given tax holidays, excise duty
concessions, cheap power, cheap land, and what not – to ‘motivate’ them
to develop infrastructure. State governments are trying to outdo each other
in providing land, water, electricity and other infrastructural facilities at
subsidized rates to business houses to get them to invest in their states.55
Tatas were given a subsidy of Rs.850 crores by the West Bengal
government to manufacture Nano.56 Now Modi is offering Tatas land at
cheap rates, concessional power tariff, god knows what all concessions in
infrastructural facilities, and a loan of Rs.9570 crore rupees at an amazing
0.1% simple interest rate – which is triple the amount of money Tata
needs to set up the car plant! This information was leaked. Modi has
ordered an investigation into the leak…57
Then, there are roundabout ways. The government is inviting foreign
and Indian business houses to invest in infrastructure (electricity, railways,
roads, ports, airports, irrigation, urban and rural water supply and sanitation)
through what it calls “public-private partnerships” or PPPs. Herein, not
only is the private partner guaranteed a minimum rate of return on its
investment (the government making up for any shortfall in profits), the
28
India becoming a colony again...
investment money is also provided by the government in the form of long
term loans at concessional rates.58 What a partnership!
c) Triggering a consumption boom by the upper classes
By far, the most important reason for high growth rates during the
period 2004-08 was a consumption boom by the country’s rich and middle
classes.
The media is full of reports by intellectuals claiming that globalization
has led to a huge increase in the size of the Indian middle class, and that it
today comprises around 20-25 crore people. But this is simply not possible.
According to the NCEUS, more than three-fourths of the population is
living on Rs.20 or less a day. It terms these the “poor and vulnerable”
sections of the population.59 According to the NSS 2004-05, about 89
percent of the population spent less than Rs.37 per day.60 Obviously, the
middle class and the rich cannot constitute 20-25% of the population, cannot
be 25 crore strong.
1) Learning from the artificial boom triggered by
their big brother – the United States – the Indian
government prodded the public sector banks to
dole out enormous volumes of credit to the middle
classes and the wealthy. The share of personal
loans in total bank credit almost doubled from
12.2 per cent during 2000-2001 to 22.3 per cent
in 2006-07.63 It is this explosive growth in bank
credit that is mainly responsible for the post2002 industrial recovery. It stimulated the
industrial boom in a number of ways:
• More than 50% of the personal loans in 2007 were housing
loans.64 It led to a boom in investment in housing and real estate.
• This real estate boom in turn spurred a growth in demand for
construction materials, and thereby led to a boom in sectors such
as cement, steel, tiles, glass, various types of fittings (electrical,
plumbing, furnishing), elevators, and consumer durables such as
fans, air conditioners, and kitchen ranges.
What then is the size of the Indian middle class? From NSS 2004-05
data, it can be estimated that the middle classes, with a reported daily
expenditure of Rs.93, comprise roughly 4 % of the population. Add the
really wealthy to this, who constitute roughly 2% of the population, and
that makes it 6% of the population.61 This is also corroborated by the
international consulting firm McKinsey. It uses a figure of 5 crore for
India’s middle class, that is, less than 5 per cent of the population.62
Even though these middle classes – rich – super rich constitute such
a narrow segment of the Indian population, in absolute numbers their number
is significant. In recent years, the Indian government adopted a number of
policies to set in motion a boom in the consumption of goods and services
by these 5-6 crore people – this in turn triggered an industrial boom, and
this is one of the most important reasons for the boom in the Indian economy
during the last five years, 2002-03 to 2007-08. Obviously, any such boom
which is not based on increasing the purchasing power of the vast sections
of the Indian people who live in the most appalling conditions is not going
to be very sustainable, and is not indicative of a healthy economy. But
then, in today’s era of globalization, the ruling classes are no longer
interested in the long term growth of the economy, they are only interested
in earning maximum possible profits in the shortest possible time. With this
comment, let us take a look as to how the Indian government managed to
stimulate a consumption boom by the upper classes.
Lokayat
29
• Another type of debt-driven consumer spending promoted by
banks was through an explosion of credit card lending. The total
value of credit card transactions in 2007-08 was around Rs.58,000
crores, a 40 per cent increase over the previous fiscal year.65
• Finally, and equally importantly, it triggered an automobile boom.
89% of the new cars purchased in 2006-07 were bought with
credit; that year, outstanding bank credit for purchase of cars
and two-wheelers was Rs.109,000 crores.66
• All these in turn led to a boom in industries like metal and chemical
industries which feed consumer durables and automobiles
industries.
2) Helping along this boom in luxury consumption and housing was the
stock market boom. This was triggered by massive inflow of speculative
capital into the country (we discuss this in Part VI). Net speculative
capital flows (also known by the more sober name of FII capital flows)
into India started to rise significantly in 2003, averaging just under $9
billion a year during 2003-06. And then they simply exploded in 2007 –
in just the first ten months of 2007, the inflows reached $18.6 billion. It
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India becoming a colony again...
is these inflows that drove the stock markets to crazy levels.67 The
Sensex doubled in less than 18 months: from 10,000 at the time of closing
on June 21, 2006, it closed above 20,000 on December 11, 2007. (Which
is why the moment the FIIs started pulling out their investments in India
in 2008, the stock market collapsed.) 68 The doubling of the Sensex had
nothing to with ‘strong fundamentals’ of the economy, as was being
touted by the media and the government. All that had happened was
that enormous amounts of fictitious money or paper money had been
created, which would vanish once the stock market fell. But meanwhile,
while the going was good, it led to an increase in the incomes of the
middle classes who were in raptures over the stock market boom, and
were wildly investing even their savings in the stock markets. This
temporary increase in their incomes undoubtedly also helped the
consumption boom.
3) Another factor helping industrial growth was the stimulus provided by
exports. In recent years, apart from traditional exports like textiles, leather,
gems and jewellery, there has been some diversification in India’s exports
with exports of chemicals and engineering goods also seeing significant
growth. Given the narrow market in India, apart from luxury
consumption of the rich, any industrial growth can only base itself on
exports. Again, this is not the sign of a healthy economy, and only
indicates distorted growth.
(iii) COLLAPSE OF SMALL SCALE INDUSTRY
In order to promote small scale industry (SSI), the government had
reserved many items – such as toothpaste, footwear, garments, ice cream
– for production in the small scale sector. And so, over the years, it expanded
to occupy a very important place in the country’s industrial sector: 95 per
cent of all industrial units in India are in the small scale sector; this sector
accounts for 49% of manufacturing output and 80% of employment in
manufacturing in the country; and finally, 34% of the country’s exports
are from these units.69 The Third All-India
Census of Small Scale Industries, 2001-02,
released in 2004, estimated the total size of
the small scale sector to be roughly 1 crore
units (both registered and unregistered). It
employed roughly 2.5 crore people.70 Clearly,
after agriculture, this is the most important
sector in the country.
Lokayat
31
Now, bowing to pressure of foreign corporations, all reservation and
concessions for small scale industry has virtually ended. Subsidized credit
available to this sector is also being phased out.71 And so, except for
certain areas like export oriented industries and ancillary industries of the
private corporate sector, this sector is virtually being decimated. Lakhs of
SSIs have closed shop. The Third Census of SSIs found that of the 22.6
lakh registered units surveyed, 39% or 8.87 lakh units had shut down.
Taking the figure of 4.48 persons employed per unit on the average in this
sector as mentioned in the Census, this means nearly 40 lakh workers
have lost their jobs due to these closures.72 Another 15 per cent have gone
sick.73 The recent economic slowdown has hit the small scale sector
particularly hard. According the President of the Small and Medium
Enterprises Chamber of India, in 2007-08, about 1.14 lakh SME industries
became sick, and the number is likely to increase next fiscal.74 Globalisation
is not leading to development; it is leading to de-industrialisation of the
country.
(iv) IMPACT ON THE UNORGANISED SECTOR
Of the country’s workforce of 45.9 crores, just 2.6 crores or less
than 6% are in the organized sector (according to NSS figures of 200405).75 The bulk of the country’s working people work in the unorganized
sector – it comprises of subsistence farmers, agricultural workers, small
plantation owners (like rubber growers), fisherfolk, dairy workers and the
like, and those working in traditional manufactures like handlooms.
Globalisation is threatening to destroy the very livelihood of these many
crores of working people.
The handloom sector provides employment to around 2 crore people
directly; another sixty lakhs are employed in the powerloom sector. As a
result of globalization, this sector is slowly dying a slow death; unable to
provide their families with even one meal a day, weavers are committing
suicides.76
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India becoming a colony again...
Millions of fisherfolk & fishworkers are the mainstay of the fish
economy of India. Betraying them, successive governments have been
granting permits to big mechanized foreign fishing trawlers to fish in Indian
waters, threatening the livelihoods of these traditional fisherfolk.77
96% of India’s retail trade is by unorganized retailers. It is estimated
that nearly 4 crore people are employed in the country’s 1.2 crore retail
outlets, most of which are less than 500 square feet in area.78 The
government is gradually relaxing controls on entry of giant foreign retailers
and Indian corporate houses into this sector. Lakhs of small shopkeepers
will be rendered unemployed. They don’t stand a chance – the annual
global sales of Wal Mart, the world’s biggest retailer which is setting up
malls in India in collaboration with Bharti Enterprises (the telecom giant),
stood at $285 billion in 200579: this is more than the total retail sales of all
of India’s 1.2 crore retailers, which is estimated to be between $205 - 250
billion.80
(v) IMPACT ON AGRICULTURE
Another consequence of this remoulding of Indian agriculture will
be that India’s self-sufficiency in food will be destroyed, and we will become
dependent on imperialist countries for food supplies. Since food is one of
the most fundamental of all necessities, the imperialists will gain a vicelike grip over the Indian economy – they can then impose any condition
they desire.
Its Dutiful Implementation…
The Indian ruling classes are dutifully implementing this ruinous
imperialist project.
The Imperialist Agenda
This is the sector that concerns the maximum number of Indian
people, as it employs the bulk (nearly 60%) of the workforce. The
imperialists have launched a vicious offensive to seize control of Indian
agriculture and remould it to suit their interests.
The advanced countries mainly located in cold temperate regions
cannot produce tropical crops at all. Their agriculture is characterized by
huge overproduction of cereals, fatty meat and dairy products relative to
domestic consumption. The fertile lands of India, even more so than other
third world countries, produce a very wide range of crops, and that too,
throughout the year. We produce not only the crops and fruits grown in
the temperate lands of Europe in our Himalayan regions, but also the
typically tropical crops, which cannot be grown at all in advanced countries.
And so the US and the European Union are seeking to export their
huge surpluses of foodgrains to India – which is possible only if foodgrain
production in India is curbed – and import fruits and vegetables from us.81
Just as in the days of the British Raj – in the half century before Indian
independence, per capita foodgrains output fell by nearly 30 percent while
export crops grew ten times faster than foodgrains.82
Lokayat
The overwhelming majority of Indian peasants are small and middle
farmers who indulge in sustenance agriculture – they mainly produce
foodgrains for self-consumption; only a small proportion of their production
is for sale in the market. The imperialists want to take control of their
lands, and set up huge farms producing fruits and vegetables for export –
then they will also be able to export their foodgrain surpluses to India. For
that, Indian agriculture must first be destroyed, so that the peasants are
forced to sell off their lands.
33
The government has drastically reduced capital investment in
agriculture, rural development, irrigation and flood control, special area
programmes and village and small scale industry. Of these, the first three
are the traditional areas of public planned development expenditures in
rural areas, and are vital for maintaining rural productivity. The last two,
important for generating rural employment, have assumed importance since
the drought year 1987. Together, all these five plan heads can therefore
be called Rural Development Expenditures of the government, or RDE.
The total spending of the government of India on RDE as a percentage of
Net National Product (NNP) declined from an average of 3.8% during
the late 1980s to 1.9% in 2001-02, that is, it came down by half! Including
government expenditure on infrastructure (that is, energy and transport),
this came down from 11% during the 7th Plan (that is 1985-90) to 5.8% in
2001-02, that is again by half! 83 This, in a country where even today, over
60% of the farmers have no irrigation; and where soil erosion affects
45% of the country’s farmlands84. Expecting the country’s small farmers
to invest in irrigation canals, soil improvement, research for increasing
agricultural output, and other areas of agricultural development is simply
stupid. Likewise, infrastructure investment such as rural power projects,
roads, bridges, school buildings, clinics and so on, are never undertaken by
34
India becoming a colony again...
private investors but are vital for stimulating rural development and provide
livelihoods to those employed in building them. Utsa Patnaik estimates
that in constant 1993-4 prices, about Rs.30,000 crores less was being
spent on RDE and infrastructure by the end-decade year 1999-2000,
compared to the beginning, 1990-91. A crude point-to-point comparison
would suggest an annual income loss of between 120,000 to 150,000 crores
of rupees assuming a multiplier value between 4 and 5.85
As if this was not enough, the credit provided by banks to the
agriculture sector is also declining – it has fallen by nearly half, from 13.8
% in 1990 to 7.2 % in 2003.86 And so, farmers are becoming more and
more dependent on local moneylenders for their credit needs, who charge
exorbitant rates of interest.
The WTO Agreement on Agriculture signed by India and other
indebted third world countries is heavily loaded in favour of the developed
countries. Under this absurd agreement, the underdeveloped countries
have to reduce their already low level of farm subsidies, while the developed
countries have been able to continue their subsidies to farmers. The
developed countries pay a whopping $500 billion in subsidies to their farmers.
In contrast, India provided about $1 billion in subsidies to its 55 crore
farmers in 2001, and it is supposed to eliminate even this miniscule amount
under World Bank-IMF conditionalities.87 And so, the Indian government
is reducing its already low subsidies to agriculture. Costs of all farm inputs,
from seeds to fertilizers, electricity, diesel, and irrigation water, are rising
sharply.
The last nail in the coffin of Indian agriculture is import liberalization.
The imperialists have arm-twisted the Indian government into opening up
its markets to the highly subsidized agricultural imports from the West.
Between the triennium ending 1993-94 and the triennium ending 2003-04,
the volume of imports of crude rubber grew by 126 per cent; of raw
cotton by 536 per cent; and of edible oils by 2,379 per cent. Imported
edible oils constituted a few percentage
points of domestic consumption in the mid1990s; they now make up nearly half.88
Simultaneously, the government has
signed an “US-India Knowledge Initiative
on Agricultural Education, Teaching,
Research, Service and Commercial
Lokayat
Linkages” (or, AKI). This will identify priority areas of research and oversee
its implementation. The AKI board includes, apart from government officials
of both countries, representatives of the giant US corporations Wal Mart,
Monsanto and Archer Daniels Midland Company. The first one, as
mentioned earlier, is the world’s biggest retailer; the second, Monsanto, is
the world’s largest provider of patented genetically modified seeds; and
the last one is one of the biggest agricultural processing companies in the
world. Neither the Indian Parliament, nor the agricultural scientific
community in the country, were taken into confidence while signing this
agreement.89 It is obvious, the real aim is to hand over the reins of our
agricultural research and the future orientation of India agriculture to the
multinational agri-business corporations of the USA.
Destruction of India’s Food Security
The result of all these measures, especially cutbacks in public
investment, is that growth of agricultural GDP has plunged, from 3.3 per
cent per year during the period 1980-95 to just 2 per cent per year during
1995-96 to 2004-05.90 More importantly, growth in yields of all crops –
cereals, coarse cereals, pulses, oilseeds, sugarcane, fruits and vegetables
– has plummeted, and in some cases has turned negative.91 This is affecting
our country’s ability to feed itself: in the 1990s, both foodgrain and nonfoodgrain production growth rates have sharply declined and fallen to
below the population growth rate for the first time since the green revolution
days, despite the slowing down of the population growth rate (see table).
More disastrously, during the period 2001-05, the foodgrain production
growth rate actually collapsed to zero! Even during the half century before
independence, India’s foodgrain output had been growing at 0.11 %!!92
Table 1: Growth Rates of Agricultural Output in India93
Period
1980-81 to 1989-90
1990-91 to 2000-01
2000-01 to 2005-06
Foodgrains Non-Foodgrains All Crops Population
2.85
1.66
0.00
3.77
1.86
n.a
3.19
1.73
n. a
2.1
1.9
1.8
The sharp decline in agricultural growth rate has caused the annual
per capita foodgrain availability / absorption (a rough measure of
consumption)94 in the country to fall steeply to what it was 50 years ago.
Foodgrain availability in the country had increased from 152 kgs per head
35
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India becoming a colony again...
per year in the early 1950s to 178 kgs during the end of the 1980s. With
the beginning of globalization, it had fallen back to 153 kgs annual average
during the period 2001-04. Forty years of effort to raise foodgrain
availability has been wiped out in a mere dozen years of economic reforms.
The average Indian family of 5 is today eating 115 kgs less of foodgrains
per year than in 1991.95
Successive Indian governments since 1991, in their desire to create
conditions for rapid increase in incomes and wealth of the Indian elites,
are pushing the country towards a full-scale colonial-era famine.
Imperialist Strategy Succeeds…
No problem, say the globalisation theorists – the decline in foodgrain
production can be met by resorting to imports. Accordingly, the Indian
government imported 55 lakh tons of wheat in 2006.96 It was the first time
wheat had been imported by India in this century! The MNCs who control
the wheat exports of the developed countries promptly jacked up prices,
and we imported wheat at a whopping $207 a ton or Rs. 9.30 per kilo – it
translated into windfall profits of about Rs. 5100 crores for grain
corporations like the Australian Wheat Board, Glencore, Toepfer, Cargill,
etc. 97
The Inevitable Consequence: Farmers’ Suicides
In the face of this multi-pronged assault on their livelihoods, India’s
peasantry is being ruined. Farmers are sinking deeper and deeper into
debt. According to an official survey of farm households carried out in
2005, nearly 50 % of farmer households were in debt. The survey also
found that one-third of the indebted farmers had borrowed from private
moneylenders98 – who of course can charge
interest rates of anything from 24% to even
100%. The vast majority of the country’s
population living in India’s villages is indeed
returning to the days of the British Raj!
18 years of battering by hostile policies
have driven even the hardy Indian peasants
into such depths of despair that they are
committing suicides in droves. The total
number of farmers who have taken their own
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37
lives during the last decade is simply shocking – it is more than 1.5 lakhs!99
While farmers are thus being driven off their lands, corporate houses
have been given the green signal to enter Indian agriculture. Under armtwisting by the Centre and the World Bank, most state governments have
amended their Agricultural Produce Marketing Committee (APMC) Acts
on the lines of a model legislation proposed by the Centre. This allows
companies like Cargill, PepsiCo, ITC and Reliance to enter into agreements
with farmers to directly procure crops from them, and also allows for
contract farming.100 These giant corporations have already entered into
contracts with tens of thousands of farmers, to produce fruits, vegetables
and flowers for the world market. Since globalization began in 1991, more
than 80 lakh hectares of food growing land has been converted to growing
exportable crops.101 In the near future, as small farming gets destroyed,
corporations will move to directly set up huge farms of their own, as is
happening in many third world countries.
The imperialists have Indian agriculture in their claws, and they are
succeeding in their agenda – the Indian small farmers are being pushed
into poverty, driven to suicides, shoved off their lands, and Indian agriculture
is gradually being corporatised, so that the world’s best arable lands can
feed the rich of the developed countries.
We conclude this section by quoting Edward Goldsmith, the founder
editor of The Ecologist, and a cult figure of the global environmental
movement. In an interview to The Times of India, he stated:
“In India, how do you think farmers with less than two or three
acres of land will survive… (globalization)? They will not. They will be
pushed into the slums, every one of them. And when your farming
community goes, so will the small shopkeepers, street vendors, service
castes… (who) depend on the farming community. So you will marginalize
and make destitute some 600 to 700 million people. Can you imagine the
impact of making 700 million people destitute? No one has ever done this
in the history of the world.”102
(vi) FINANCIAL SECTOR REFORMS
The financial sector is the nerve centre of any economy. The public
sector banks and insurance companies have played a crucial role in India’s
development plans. They have mobilised hundreds of thousands of crores
of rupees in the form of small savings from the common people, and put
38
India becoming a colony again...
them at the disposal of the government for investment in national priorities
like agriculture, small industries, housing, rural electrification, development
of backward areas, infrastructure, and the like. The deposits mobilized by
the public sector banks had crossed Rs.19 lakh crores as on March 31,
2007.103 The Life Fund of LIC had crossed Rs.6.86 lakh crores, and its
Asset Base stood at Rs. 8.03 lakh crores in 2007-08; it had invested Rs
82,022 crores in the infrastructure and social sector as on 31st March
2008.104
Which is why the imperialists are keen to seize control of these
institutions – so that they can gain control of these huge funds, and use
them as per their interests. So they have demanded the privatization of
India’s financial sector, and the Indian government is duly obliging. The
blueprint is ready. The delay is only because of the resistance of the militant
and organized bank and insurance sector unions.
Apart from its adverse consequences for the overall development
of the economy, privatization of the public sector financial institutions will
affect the common people in a more direct way too, with devastating
consequences. Read on.
Foreign insurance companies: Crooks, scoundrels, fast operators…
India’s public sector insurance companies (LIC and GIC) are
amongst the best run insurance companies in the world. For example,
LIC’s claim settlement ratio, which is the most
important measure of the honesty of an insurance
company towards its customers, is more than
99%,105 which is way above the international
average of 40-60%.106 With the privatization of
these companies, the chances of they not paying
genuine claims on one or the other pretext will
be very high – it is because of this that the
international claim settlement ratio is so low.
Worse, they can also declare bankruptcy and
vanish.
We are not exaggerating. Swindling is a common phenomenon in
the world insurance industry. Scores of insurance companies in the
developed countries have declared bankruptcy, because of speculative
investments and unethical practices. In the US, the number of failures
reached such scandalous proportions that the US House of Representatives
Lokayat
39
set up a committee to investigate. Its report submitted in 1990 stated that
the US insurance sector was marked by “scandalous mismanagement”,
and that “Fast operators in the industry are ignoring the rules, creating
new schemes to enrich themselves, and walking away unscathed”.107
The situation is no better today – American International Group (AIG), a
$1 trillion insurance company, the largest insurance company in the world,
was rescued from bankruptcy in September 2008 by the US government
by giving it a $85 billion dollar loan. In India too, insurance was earlier in
the private sector; it was because the private insurance companies were
indulging in innumerable malpractices and even outright swindling that the
insurance sector was nationalised.108 Now, once again, insurance is
gradually being privatized, and the swindling has already begun. Lifeline
Global, a medical insurer, suddenly shut shop in 2006 – it had thousands of
clients in Pune alone.109
Private Banks: No Guarantee of Deposits…
Likewise, once the public sector banks are nationalized, there is no
guarantee that their private owners will not indulge in financial
mismanagement or outright cheating and declare bankruptcy. The East
Asian financial crisis of 1997 saw numerous private financial institutions
going into liquidation. Some of the biggest private sector banks in the
developed countries have collapsed in the last few months (in 2008) –
they were all indulging in speculation with people’s savings.110 In India,
during the past many years, numerous cooperative sector banks have
gone bankrupt because of fraud by their directors, resulting in lakhs of
ordinary people losing their hard-earned life savings. However, because
of government controls, no public sector bank in India has ever closed
down. This guarantee will end, once these banks are privatized. Imagine
what will happen if say the Bank of Maharashtra declares bankruptcy
and downs its shutters all of a sudden one day!
Clive’s successors have their eyes set on
workers’ savings too. So far, the workers’ provident
fund corpus was managed by the State Bank of India
(SBI) on behalf of the government, and it has grown
to a huge Rs.2.4 lakh crores. The government has
taken the first steps to privatise this. On July 30, 2008,
ending the monopoly of the SBI, the government
allowed HSBC Asset Management Company, ICICI
Prudential and Reliance Capital to share in the
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India becoming a colony again...
management of this corpus that contains the provident fund deductions
from the salaries of about 4.5 crore workers in the government and
organised sector.111 Within a fortnight of this, it announced that from April
1, 2009, private provident, pension and gratuity funds will be allowed to
invest 15% of their investible money in stock markets.112 What happens
when the stock market collapses? The recent stock market collapse has
led to the disappearance of billions of dollars from pension plans of workers
around the world (that is, wherever they are privatized). In the USA, state
and local governments’ pension funds support some 27 million Americans,
and many have lost a fifth of their value this year (2008).113 The California
Public Employees’ Retirement System (CalPERS), the largest pension
fund in the US and fourth largest in the world, has suffered one of its
worst annual declines since the fund’s inception in 1932. At its height in
October 2007, it had $260 billion in assets, comparable to the GDP of
Poland, Indonesia or Denmark. At the end of 2008, CalPERS was worth
$186 billion! Tens of thousands of retiring state employees now face the
stark choice of accepting much reduced pension checks or working past
their retirement age.114
(vii) GLOBAL GARBAGE DUMP
In their lust for dollars, the country’s rulers have transformed India
into a garbage and toxic waste dump of the imperialist countries.
Delhi has become the world’s capital for e-waste recycling – a very
hazardous industry which contaminates the soil and groundwater, and
causes severe health problems to the workers. In the developed countries,
recycling is strongly regulated and extremely costly
– it is cheaper for them to ship their waste to India.
And, a slavish Indian government is allowing them
to do so – to the extent that over 70% of the
electronic waste generated in the developed world
is now coming to Delhi! As an incentive to this
industry, the government has deliberately left it totally
unregulated.115
India is also the toxic waste dump of world shipping. Toxic ships
from around the world, contaminated with thousands of tons of deadly
chemicals, are brought to Alang in Gujarat, the world’s largest ship-breaking
yard, to be broken up. The workers come from India’s most backward
states. Around 60 workers die each year from accidents, hundreds more
Lokayat
41
are injured, and one in six workers suffer from asbestosis, a killer disease.
But scrapping one large ship can mean $10 million, or Rs. 50 crores.
That’s big money, surely our people are not worth that much. So even the
Supreme Court has refused to intervene. “No development is possible
without some adverse effect on the ecology and environment,” said a
court statement last year.116
As if this was not enough, the country is also becoming the household
waste dump of the developed countries. Recycling rubbish in the developed
countries is also a complicated and costly affair – the cost can go up to
Rs. 12,000 per ton. Shipping it to India is much less of a hassle, it is also
much cheaper – just Rs. 2,800 a ton. And so Great Britain and USA are
shipping their garbage to India.117 Mera Bharat… garbage superpower!!
1000 more Bhopals
In order to lure foreign investors into investing
their billions in the country, the government is
allowing them to ravage our environment. Foreign
MNCs and their Indian collaborators, the big private
Indian corporates, are being allowed to cut down
entire forests, destroy coastal lands in the name of
aquaculture, over-exploit groundwater, pollute our
seas-rivers-soil-groundwater-air, indulge in
indiscriminate mining, damage the health of not just
the living but also of those yet to be born. Here are
some examples:
• Most countries, including the European Union and USA, have banned
the use of all forms of asbestos, which causes asbestosis and lung cancer.
However, under pressure from the local Rs.2000 crore asbestos cement
industry, the government of India refuses to ban it, and it continues to
be used widely in India. India continues to import nearly Rs. 230 crore
worth of asbestos and consume over 125,000 million metric tonnes a
year! 118
• Big business houses are constructing and operating factories and mines
in blatant violation of environmental laws. Big industries like Vedanta
Alumina (Orissa), Sterlite (Tuticorin, Tamilnadu), Jindal Steel
(Chhattisgarh) first constructed the factory, then commenced production,
and were then accorded backdated permission.119 Chemplast’s PVC
factory in Mettur, Tamilnadu, dumps its dioxin-laden toxic effluents into
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India becoming a colony again...
the Kaveri River, polluting drinking water of several villages. 120
Thousands living near SIPCOT chemical industrial estate in Cuddalore,
Tamilnadu, are virtually living in a gas chamber.121 Pollution by Oswal
Chemicals (Paradip, Orissa) is devastating lives of over 1 lakh people
living around the plant.122
• Some of the world’s most polluted toxic hotspots are in India. One of
these is the Eloor industrial estate near Cochin, Kerala.123 In the Sukinda
Valley in Orissa, one-fourth of the people suffer from pollution-induced
diseases. The chemical industry belt between Vapi and Ahmedabad in
Gujarat is a toxic nightmare: mercury levels in groundwater are 96 times
higher than safety levels…124
• The more than 90 bottling plants of Coca Cola and PepsiCo draw out
lakhs of litres of groundwater every day, causing water shortages for
people; and they dump their toxic wastes in nearby fields, destroying
agriculture, causing diseases.125
• Indiscriminate industrialization caused the country’s dense forest cover
to shrink by 26,000 sq.km. during 2001-03.126 In the late 1990s, India’s
Central Pollution Control Board found that groundwater was unfit for
drinking in every one of the 22 major industrial zones it surveyed; a
shocked CPCB chairman D. K. Biswas commented, “The results are
frightening…”127
Despite the immensity of the environmental crisis, the Ministry of
Environment and Forests of India has been trying to push through a series
of policy and legislative changes in the Environmental Clearance Process
in the country, which will make it even more easier for MNCs to get
environmental clearance for dumping their toxic wastes and shifting
environmentally destructive projects to India.128 Dollars, O dollars, O
dollars-dollars-dollars…
(viii) EMBRACING THE NUCLEAR ENERGY DEMON
Probably the icing on the cake for foreign companies seeking
investment opportunities in India is the Indian government’s decision to
embrace nuclear energy in a big way. This is expected to provide US and
European nuclear power plant suppliers like Westinghouse and Areva a
$100 billion business opportunity. These companies have been facing a
drought of new orders for nuclear reactors since the Three Mile Island
accident in 1979 and Chernobyl accident in 1986. No reactor has been
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43
ordered in the US since 1978, and even
that plant was later cancelled, as
eventually were all US reactor orders
after 1973.129 Likewise, just 4 reactors
are under construction in the enlarged
European Union, of which 2 are in
Western Europe (Finland and France)
– these are the first orders in Western
Europe in nearly two decades.130 And both these nuclear plants have run
into trouble with the Finnish and French nuclear safety authorities.131 The
reason why nuclear power is on a decline in Europe and USA is because
not only is it exorbitantly costly, it is also a deadly killer…
Even under normal operations, each stage of the long process of
generating electricity from Uranium, called nuclear fuel cycle, is deathly
to humans132:
• Uranium miners and people living near these mines are exposed to
radioactive dusts and toxic chemicals – which cause lung cancer,
deformities in children, sterility in women. While the mine gets exhausted
in a few decades, the radioactive mine waste dumped near the mines
will continue to emit radiation for hundreds of thousands of years, causing
birth deformities in children, and bone and lung cancers and blood
diseases like leukemia among the people living near the mines.
• The nuclear power plant routinely releases radioactive gaseous and
liquid wastes into the atmosphere. These wastes contain some terribly
radioactive chemicals like tritium (emits radiation for 250 years),
strontium-90 and cesium-137(both are radioactive for 600 years).
Radiation mutates the genes in the cells of the human body, causing
diseases of old age in young, tumours, cancer; it also mutates the
reproductive genes, causing birth deformities in future generations. The
life of a nuclear power plant is around 40 years, while these wastes will
continue to cause disease and death among the people of the region for
thousands of years.
• The most monstrous problem is of safely storing the highly radioactive
spent fuel from the nuclear power plant, which will remain radioactive
for 2.5 lakh years! It is now more than 50 years since the first nuclear
power plant commenced electricity generation. No country in the world
has come anywhere near finding a solution to this problem. A solution is
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India becoming a colony again...
just not possible! How do you guarantee that any storage mechanism
for storing such deadly chemicals will not ever leak in the future? In
France, a permanent site for this waste has already leaked into the
groundwater used by local farmers.133 The underground aquifer has
become polluted till the end of time…
Nuclear power plants are also susceptible to catastrophic accidents.
Like that at the Cherobyl nuclear power plant, in April 1986. It resulted in
several thousand deaths, and contaminated an area the size of Maharashtra
for the next 20,000 years.134 Given the kind of complexities involved, there
is no way to ensure that reactors will not have major accidents in the
future.135 There have been so many near-misses in the last many years
that it only sheer fortune that another Chernobyl has not happened.136
Nuclear power even on paper is one and a half times as costly as
electricity from coal and gas. The actual cost is much more, because
governments the world over subsidise nuclear power to the tune of billions
of dollars.137
Despite all these very well known facts, India’s traitorous intellectuals
have launched an intense propaganda campaign to convince the people
that nuclear power is safe, environmentally friendly and cheap. The Indian
government has announced plans to set up nuclear plants in a number of
places in the country. Probably the world’s biggest nuclear power plant is
coming up near Jaitapur, in Ratnagiri district (Maharashtra). It is going to
be set up by the French company Areva, and is the same reactor whose
safety has been questioned by French and Finnish nuclear regulatory
authorities. If there is a major accident, Pune will have to be evacuated.
India’s rulers have sold their souls to the devil for a price that would
have shamed Faust!
(ix) BECOMING AN AMERICAN BULLDOG
India’s brown rulers are jettisoning the country’s
independent defence policy too! They are re-orienting
it to make India an American bulldog for the Asian
region – the role which Israel plays for America in the
Middle East. And so both bulldogs are also cozying up
to each other these days.
The US defence establishment has candidly
admitted that it views India as a future military partner
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45
that can “take on more responsibility for low-end operations in Asia,
such as peace-keeping operations, search and rescue, humanitarian
assistance … which will allow the US military to concentrate its
resource on high-end fighting missions” (emphasis ours). This report,
titled “The Indo-US Military Relationship: Expectations and Perceptions”,
was commissioned by the Pentagon in October 2002. It also admits to
American plans to “eventually seek access to Indian bases and military
infrastructure”.138 The Indian agents are wagging their tails in delight; on
June 28, 2005, India and the US signed a “New Framework for the Defence
Relationship” which outlined an action plan for this.139
As a reward for their betrayal, the US offered India’s rulers an
agreement on nuclear cooperation. It would enable India’s ruling elites to
justify their close defence ties with the US, and will also enable them to
strut around claiming that the US is indeed ‘helping’ India to become a
‘world power’. Two weeks after India signed the above mentioned ‘New
Framework’ for Indo-US defence cooperation, President Bush and Prime
Minister Singh announced their intention to enter into a “nuclear
cooperation” agreement.140 While the nuclear deal had to pass muster
with the US Congress twice before the agreement was formally signed
by Indian External Affairs Minister and his US counterpart on October
10, 2008, the Indian government blocked the deal from being scrutinized
by the Indian Parliament. A sad comment on the sanctity of India’s highest
democratic institution for the rulers of the country!
The Indian Prime Minister has broken all records in obsequiousness
and fawning while defending the Indo-US nuclear deal in Parliament. The
Bush administration’s replies to questions raised by US Congressmen on
the nuclear deal were kept under wraps and were made public in
September 2008. They reveal that Prime Minister Manmohan Singh has
been lying to the Indian Parliament all along! For instance, while Manmohan
Singh claimed that the deal will enable India to get sensitive nuclear
technologies which will accelerate the industrialization of the country, the
Bush letter explicitly states that this is not part of the deal. The Bush letter
also states that the deal is conditioned on India not conducting a nuclear
test again. Further, once the US terminates the agreement, it will actively
prevent other countries from supplying nuclear material to India. On both
these points too, the Indian PM has blatantly and repeatedly lied to the
Indian Parliament.141 While we are strongly of the opinion that India should
not conduct a nuclear test, this is a sovereign decision which is for the
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India becoming a colony again...
country to take, it must not be made under pressure, the US has no right to
bully us on this. But on this issue too, India’s rulers are getting Yankeekicked.
The implementation of the action plan to make India a pawn in US
hegemonic interests in Asia has begun. US warships are increasingly
visiting Indian ports, joint air and sea military exercises are frequently
taking place, Indian defence establishments are being thrown open to
inspection by US troops…
There is little room for doubt. A new regime has come, willing to
bow bhaktifully before Dollar Almighty and the high priests in the White
House.
PART V
THE EPHEMERAL BOOM GOES BUST
Despite these enormous costs being paid by the country to keep the
wheels of capitalist accumulation moving, over the last few months it is
becoming obvious that the Indian economy is slowing down. (Just to remind
our readers, these lines were written in 2008, and we are referring to
the recession of 2008-09). Till just a few months ago, India was being
projected as an economic superpower, and it was expected that the growth
rate would soon touch double digits. The way the media and the government
were putting it, it appeared that growth would go on for ever. Now this
euphoria seems to be evaporating.
Officials and commentators are putting all the blame for this bursting
of India’s growth story on external factors. ‘There is nothing wrong with
our fundamentals, it is just that there is a global recession’ is their
explanation. But as discussed in Section (ii) of Part IV above, the post2002 boom was a distorted boom, it was on a very narrow base. It was
not based on increasing purchasing power of the vast majority of the people
who are living in abysmal levels of poverty. On the contrary, it was in
large measure due to an increase in luxury consumption and housing
investment by the rich. This was in turn fuelled by liberal loans given by
banks; the stock market boom fuelled by FII inflows also helped it. External
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47
factors like boom in exports also helped
it along, but this only further substantiates
our argument that the boom was on a
very narrow base.
The industrial boom and the boom
in India’s GDP growth rate during the
past five years were therefore not the
result of ‘strong fundamentals’ of the
Indian economy. On the contrary, the
boom was artificially triggered. Demand
was restricted to just 5-6% of the
population. Obviously, such a boom
cannot sustain for long. After all, how much can the rich splurge! Sooner
or later, the debt-driven consumption boom had to saturate, and industrial
growth had to slow down. This is precisely what has started to happen
from the beginning of this year (2008). That is, well before the economies
of the developed countries went into recession. This is borne out by the
fact that the Index of Industrial Production (IIP) had peaked in March
2008 and then had fallen quite sharply. Likewise, the production of consumer
goods peaked in January 2008 and since then has fallen continuously.142
While external factors did not cause the slowdown, they have
aggravated it: the economic slump in the developed countries has led to a
sharp decline in our exports.
Another factor worsening the slowdown – we repeat, worsening it,
not causing it – is the stock market collapse. In calendar year 2007, net
FII inflows into India were roughly $20 billion. They sent the stock market
soaring. And then, in the first nine and a half months of calendar year
2008, they pulled out $11.1 billion. The stock market collapsed, just as
quickly as it had boomed: the Sensex fell from its closing peak of 20,873
on January 8, 2008 to less than 10,000 by October 17, 2008.143 The collapse
of the stock market ended the speculative gains of the middle classes,
many found their life savings vanishing because of the collapse, and many
are deep in debt.
Given the very low demand in the economy because more than
80% people are living on the margins, let us wait and see what new trick
is tried by the government to again trigger a new artificial recovery so that
the capitalists can further fatten themselves.
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India becoming a colony again...
Part VI
ENTRAPPED IN A FINANCIAL WHIRLPOOL
One of the most important components of the World Bank dictated
economic reforms is the opening of the economy to foreign investment by
what are known as foreign institutional investors or FIIs, which is but a
more respectable name for foreign speculators.
The Financial Explosion in the West
The economies of the developed countries have been slowing down
since the 1970s – a consequence of the inherent logic of monopoly
capitalism (which we cannot discuss here for lack of space),. As the
stagnation has deepened, investment opportunities for the massive amounts
of capital accumulated with the MNCs have dried up.
This led to a strange phenomenon – a
financial explosion. Giant corporations as well
as banks and financial institutions began
pouring hundreds of billions of dollars into the
stock markets. Not into new shares, because
there were none – because of the stagnation,
capitalists were not setting up new factories.
So, investors poured in their billions into purely
speculative transactions. They began buying
shares of existing companies, in the hope that
the share prices would go up and they can
then sell at a profit. All kinds of new financial
instruments were created – like futures,
options, swaps, and so on – for investors to invest for speculative gains.144
This financial explosion has today taken on gargantuan proportions.
The amounts involved are simply mind-boggling, of the order of many
trillions of dollars. According to the renowned US scholar Noam Chomsky,
more than 95% of the international financial transactions today are purely
speculative in nature145, meaning they have nothing to do with the real,
productive economy: they do not create jobs, have nothing to do with
production of goods and services, do not benefit the ordinary people in any
way.
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49
The developed capitalist countries have become casino economies.
Instead of the production system being served by a modest financial adjunct,
a greatly expanded financial sector has now achieved a high degree of
independence and sits on top of the underlying production system. And
with the corporations of the developed countries expanding to dominate
the global economy as a result of globalisation, the outgrowth of MNC
capital – speculative capital – now dominates the globalised world economy
too!
Growing Dependence of Indian Economy on Speculative Capital
Inflows
Globalisation of the Indian economy had been undertaken because
it was seen as a solution to the foreign exchange crisis gripping the country
in 1991.
However, as we have seen in Part III above, while it has temporarily
provided succour, in the long term it has only created conditions for a
further worsening of the crisis. The external debt has nearly trebled, to
$221 billion. The trade deficit ballooned to $90 billion in 2007-2008.
The government has been partly moderating the growing deficit by
remittances from Indian people abroad, and by software exports. (Note:
Software export figures are not included in foreign trade statistics by the
RBI; in the balance of payment tables, they are included under the heading
of “Invisibles”.)
One way of covering up the remaining deficit is to open up the
economy to foreign investors willing to bring in dollars and invest in the
production of goods and services in the country – called foreign direct
investment (or FDI) inflows. But despite the best efforts of the government,
which has put up the country’s mineral wealth, agricultural lands,
infrastructure (which is mainly in the public sector), even our forestsmountains-rivers-coast on SALE, FDI inflows have been very limited.
Furthermore, FDI inflows lead to profit outflows.
And so, the government has been desperately looking for alternate
ways of financing this current account deficit. In 1992, it opened up the
economy to speculative capital inflows from the developed countries. Since
then, these inflows have simply soared. It is these huge inflows which are
responsible for the country’s booming foreign exchange reserves, which
had crossed $300 billion early this year.
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India becoming a colony again...
To illustrate, during the period April-December 2007, the trade deficit
was $66.5 billion. But due to receipts of more than $50 billion, mainly led
by remittances from overseas Indians ($13.8 billion) and software services
($27.5 billion), the current account deficit for this period was $16 billion.
This deficit was financed through capital inflows. But these inflows were
far more than this deficit: net capital inflows during the first nine months
of financial year 2007-08 amounted to $83.2 billion, of which portfolio
capital flows constituted $33 billion. These capital inflows led to a sharp
rise in foreign exchange reserves of the government of India, by as much
as $76 billion.146
To entice these highly volatile capital inflows into the country, the
government is gradually relaxing all controls on these inflows. Some time
ago, it even allowed the notorious ‘hedge funds’ to enter the Indian market.
To keep the speculators happy, it is giving them the most outrageous
concessions. For instance, the government has entered into a Double
Taxation Avoidance Treaty with Mauritius, wherein investors routing their
investments into India through Mauritius do not have to pay any taxes on
their huge profits in India (and not in Mauritius also, as capital gains are
exempt from taxes there)!147
Heading into another Financial Collapse
The FIIs can pull out their capital at the tap of a computer key. Even
the normally conservative Times of India, which supports the reforms
every inch, was constrained to warn in an editorial some time ago: “India’s
trade deficit is no longer in the comfort zone… the Economic Advisory
Council of the government pegs the current account deficit, or the sum of
trade deficit and remittance flows, at… about $18 billion. India depends
primarily on its $10 billion net foreign institutional investment to plug the
gap. While FII inflows are likely to increase over the years owing to rising
confidence in the Indian economy, they should not be relied upon to plug
the current account deficit. FIIs can pull out large sums of money just as
easily as they invest.”148
This is precisely what has been happening over the past six months,
raising the specter of a financial collapse similar to 1991 once again.
In the first half of the current financial year (Apr – Sept, 2008), the
trade deficit further accelerated by 53%, as compared to the same period
last year.149 October brought more bad news. Because of the global
economic slump which is deepening by the day, exports which had grown
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51
by 30% during the first six months of this
year have not just slowed down but declined,
by 15% in October 2008 (as compared to
the same month last year)! 150 Even by
conservative estimates, the trade deficit is
expected to cross $125 billion this year!!151
An editorial in The Hindu admits:
“Unlike in the past, remittance and service
export earnings have not helped in moderating
the deficit… earnings from exports of
software and a variety of other services are
expected to be less consequent on the slowdown in the United States.”152
The FIIs are understandably worried. They have started pulling out
their money. In the last six months, our foreign exchange reserves have
fallen by $63 billion. Considering that India still has $246 billion of forex
reserves, this should have been no cause for worry.
But as we have mentioned above, FIIs can pull out their money just
as easily as they invest. Our forex liabilities are rapidly going up. Of India’s
external debt, at least $80 billion is expected to mature within the next
year.153 Add to this our ballooning trade deficit, of $125 billion (estimated,
for 2008-09), and it is obvious that if the FIIs pull out another $100 billion,
the Indian economy would be on the verge of external account bankruptcy
once again.
While government spokespersons continue to put up a brave face
and claim that the economy is very sound, the reality is that the Finance
Ministry is desperately looking for additional ways of boosting the country’s
dollar reserves. On November 23, 2008, the Indian Express carried a
front page headline that the government is considering a currency swap
arrangement with the US Federal Reserve Bank or the European Central
Bank. This will provide the Reserve Bank of India (RBI) with a dollar line
of credit which it can tap as and when required. The Indian Express
approvingly commented: This “(b)oosts foreign exchange sentiments,
investor confidence, acts like a second line of defence.”154 The economic
superpower is turning out to have feet of clay…
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India becoming a colony again...
A New Regent in Delhi
PART VII
Nothing comes without a price. Realising that the Indian economy is
in dire straits, the foreign investors and their concubine, the World Bank,
are demanding an acceleration of economic reforms.
And so they have sent a new Regent to New Delhi to oversee the
implementation of the economic reforms. On November 3, 2008, the
government announced the appointment of Raghuram Rajan, a former
Chief Economist of the IMF, as the new Chief Economic Advisor to the
Prime Minister of India. Rajan had earlier headed a committee set up by
the Prime Minister on financial sector reforms.155 The appointment of
Rajan signals that the government is going to accelerate financial sector
reforms – privatization of the insurance sector, privatization of banks, giving
more freedom to foreign speculators to invest in the country. The very
policies that have led to the deepest economic crisis in the United States
since the Great Depression. The financial vultures in the United States,
who are in deep trouble following the economic slump there, want the
Indian government to accelerate the privatization of India’s financial sector
institutions, so that they can feast on the life savings of crores of ordinary
Indians and make multi-billion dollar profits.
A funeral hymn for Swaraj in just 60 years is too treacherous, yet
true. What a fall, O fellow citizens! Possibly it was concern for just such
a situation that prompted Dr. Ambedkar to speak thus to the Constituent
Assembly in his final address:
“On 26th January, 1950, India will be an independent country. What
would happen to her independence? Will she maintain it or will she lose it
again?
“The point is that she once lost the independence she had. Will she
lose it a second time? It is this thought which makes me most anxious for
the future. What perturbs me greatly is the fact that not only has India
once before lost her independence, but she lost it by the infidelity and
treachery of some of her own people.”
Unfortunately, the apprehension of the father of the Indian
Constitution is proving to be prophetic!
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53
IMPACT ON PEOPLE
(i) MASSIVE DESTRUCTION OF EMPLOYMENT
Where are the industrial jobs?
During the initial years of globalization, there was some growth in both
public sector and private sector employment: total organized sector
employment rose by 12 lakhs during the period 1991-96.
However, as globalisation and privatization (that is, closure of public
sector undertakings) accelerated, it has led to a massive decline in public
sector employment. During the period 1996-2005, total public sector
employment declined by a whopping 14.1 lakhs. This, in a sector where
during the period 1981-96, more than 39 lakh jobs had been created! The
proponents of globalisation would say: that should be no cause for worry,
the private sector will more than compensate for the decline in public
sector employment. But official figures show that something totally different
is happening: after creating 10 lakh jobs during the period 1991-98 (and
13.6 lakh jobs during 1981-98), total employment in the private organized
sector during the period 1998-2005 has declined by 3 lakhs! This, despite
the GDP growing by over 5% a year!156
Actually, this should be no cause for surprise. The entry of MNCs
into India is forcing the private corporate sector to restructure its operations.
Even while their profits are increasing, the big business houses are shedding
lakhs of workers. For instance, in 1999, Tata Motors produced 1,29,000
cars with 35,000 workers. 5 years later, while
production had gone up by two and a half times
to 3,12,000 cars, the number of workers had
reduced by one-third to just 21,000.157 In Bajaj
Auto, 23,000 workers were producing 10 lakh
two wheelers (scooters and motor cycles) in
1995; a decade later, in 2004, less than half that
number (11,000 workers) produced 15 lakh
vehicles.158 The situation is the same with all
business houses, from Crompton Greaves to
Reliance.
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India becoming a colony again...
And, as we discussed above, the small scale sector is getting
decimated.
tired bodies, there are long queues of fresh, young workers waiting to take
their places.
The result is that total employment in the entire organized sector
(that is, the public sector and private organized sector combined, in other
words, in all of India’s registered factories) declined so steeply in the late
1990s – it shed more than 17 lakh workers during the period 1998-2005 –
that there has been an absolute decline in the total number of workers
working in the organized sector since 1991: from 267.3 lakhs in 1991, the
number had come down to 264.6 lakhs in 2005 (Table 2).159
What about the Software and BPO Sector?
Clearly, while MNCs create a tiny number of jobs, they destroy
many times more jobs.
Table 2: Organised Sector Employment in India, 1991-2005
in lakhs
Year
Public Sector
Private Sector
Total
1991
190.6
76.8
267.3
1998
194.2
87.5
281.7
2005
180
84.5
264.6
Despite all the propaganda being made about the potential of this
sector to create millions of jobs, the reality is the exact opposite. The
Information Technology or IT sector is composed of two parts: the software
sector and the BPO sector. In 2003, they accounted for 490,000 and 160,000
jobs, respectively.160 That’s all. And by the year 2007, the total employment
in this sector, despite the massive boom, had gone upto only 16.3 lakhs,
according to govt of India figures.161 Which is one-third of one percent,
that is, only 0.33% of the total employment in the country (total labour
force in 2007 was 5080 lakhs)! This was before it was hit by the slump in
the developed countries.
Destruction of Agricultural Employment
Because of the hurricane that has hit the agricultural sector,
employment growth in this sector collapsed to zero – actually 0.02% per
year – during the period 1994-2000. This, for a sector that provides
employment to nearly two-thirds of the country’s workforce. Had
agricultural employment continued to grow as in the previous period, it
would have created 2.7 crore jobs during this period! 162
The Net Result: Collapse of Employment Generation
The capitalist classes are ruthless in their quest for profits. Taking
advantage of the growing unemployment and weakness of the trade union
movement in the country, the country’s rulers have launched an all-out
attack on all concessions granted to the working class. Labour laws are
being modified, making it easier for the capitalists
to retrench permanent workers, employ contract
workers, and outsource a part of their operations
to small scale factories working with low-paid
daily wage workers. Therefore, not only is total
industrial employment decreasing, the quality of
available employment is also decreasing.
Workers now work for 10-12 hours a day. With
no overtime payment. No paid leave. And then,
when they reach the age of 40, they are thrown
out – the capitalists now no longer need their
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55
And so, even official data admit that employment generation in the
post-globalisation period has drastically fallen. These figures are given in
the National Sample Surveys of 1983, 1993-94 and 1999-2000. These
figures conclusively show that there was a sharp slowdown in the rate of
growth of employment in the Indian economy: from 2.7 % per year during
1983 to 1993-94 to 1.1 % per year during 1993-94 to 1999-2000. The
number of new jobs fell from 76 lakhs a year in the earlier period to 35
lakhs a year in the later period (Table 3).163
Table 3: Employment Growth in India, 1983 to 2000
Million person years
1983 1993-94 1999-00
Workforce
56
239.6
315.8
336.8
Growth per annum (%)
1983 to 1993-94 to
1993-94 1999-00
2.70
1.07
India becoming a colony again...
Where are the new jobs being created?
Let us also take a look at the kind of jobs being created in the Indian
economy. From Table 3, it can be seen that during the six-year period
1993-94 to 1999-2000, a total of 2.1 crore jobs were created. Now, where
were these jobs created?
a) 55 lakh ‘jobs’ were created in very tiny units and home-based
manufacturing. When there are no jobs, people are making papads,
pickles, agarbattis, potato chips, whatever they can make and sell in the
market, to somehow stay alive. Actually, all these people are unemployed.
But government data claims that all these are ‘manufacturing sector’
jobs!
b) Another 40 lakh jobs were created in the unorganized construction
sector: where labourers work in terrible conditions, devoid of medical
facilities, disability compensation, education for children, and decent
housing. Yet, one in six jobs created in India’s ‘booming’ economy are
in this sector!
c) The main source of fresh employment was the
service sector, where 1.15 crore jobs were
created. Within this sector, the biggest share was
that of “trade, hotels and restaurants”, which
yielded an additional 1.07 crore jobs between
1993-94 and 1999-2000. “Trade” includes all sorts
of petty vendors; “hotels” includes horribly lowpaid jobs in tiny tea shops and eateries.164
2004-05, about 836 million or 77 per cent of the population were living
below Rs.20 per day … without any legal protection of their jobs or
working conditions or social security, living in abject poverty and excluded
from all the glory of a shining India.”165
Further Destruction of Employment Due to Economic Slowdown
As discussed in Part V, the Indian economy has started to slow
down. The deepening crisis is having a terrible impact on the unorganized
workers in the organized sector. Most factories today have a very large
number of informal or contract workers. As demand shrinks, every factory
is laying off its contract workers. Since they are contract workers, no
retrenchment compensation need be paid. Tens of thousands of workers
have already been laid off. Likewise, the slowdown in the construction
industry has affected construction workers.
The situation is even worse in the unorganized sector. All sectors
dependent on exports are seeing a severe slowdown, and lakhs of
unorganized workers are losing their jobs – from workers in the textile
industry to diamond cutters of Gujarat.
(ii) WITHDRAWAL OF SUBSIDIES TO THE POOR
These then are the kind of jobs being created
in the Indian economy since the beginning of
globalization. Calling them ‘jobs’ is actually shameful – they represent
people driven to the edges, struggling to somehow earn half a meal a day
and stay alive.
India’s rulers have given up all concern for the tens of thousands
people who die every year from entirely curable diseases due to lack of
affordable health care, for the urban poor living in sub-human conditions
in the slums, for the tribals dying of hunger in Melghat, for the millions of
children who die of diarrhoea every year due to lack of clean drinking
water. They are dutifully implementing another World Bank diktat: eliminate
all subsidies to the poor.
The Arjun Sengupta Report
In the new doublespeak diction of
‘globalisation’, the thousands of crores
of rupees of subsidies to the rich are
justified as ‘incentives’. A few examples
of this largesse doled out to the rich:
These dismal facts are borne out by the report on “Conditions of
Work in the Unorganised Sector” prepared by the NCEUS and submitted
to the government of India in August 2007. The report points out that
India’s buoyant economy as reflected in its high growth rate, high investment
and savings rate, and remarkable export growth, has not touched the
majority of the Indian people. The report goes on to say: “At the end of
• Export subsidies to the tune of tens
of thousands of crores of rupees in
the name of ‘export promotion’.166
• Waiver of loans given to the corporate
houses by the Indian public sector
banks and financial institutions.
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India becoming a colony again...
According to P. Sainath, Rs.45,000 crores has been written off in the
last five years alone. 167 Therefore, it wouldn’t be an exaggeration to
say that the total loan waivers will easily be more than Rs. 1 lakh
crores in the last decade alone. The list of defaulters includes the best
known names of the Indian corporate sector. 168
• Transfer of national wealth to big business houses at throwaway prices:
natural resources like oil, mineral deposits, forests and public sector
enterprises are simply being handed over to big business houses for
them to exploit and mint super-profits.
• Direct tax concessions to the rich: in 2007-08 alone, the total tax revenue
forgone on corporation tax, excise duty and customs duty in the name
of ‘incentives’ to corporate houses was estimated at Rs.2.36 lakh crores,
which was over half the total revenues actually collected under these
heads in that year.169
• Indirect tax concessions to big business, in the name of SEZs, publicprivate partnerships, and so on: total lakhs of crores of rupees.
• Even after these huge tax concessions, the rich do not pay the remaining
little taxes they are legally supposed to pay: by March 2008, their total
tax arrears amounted to about Rs.39,000 crores on corporation tax and
Rs.20,000 crores on customs duty, excise, and service tax!170
On the other hand, the nawabs
of Delhi, following the dictates of the
World Bank, are reducing the
government expenditures aimed at
making available essentials like food,
education, health, electricity and water
to the poor at cheap and affordable
prices. For the blood-sucking vampires
who grace the portals of power in
Washington, the paltry government expenditures on sick hospitals,
dilapidated schools and contaminated drinking water facilities appear to
promote parasitism. It is another matter that when ‘Free Markets’ cause
the collapse of giant corporations, as is happening in the USA at present,
these very same economists cook up all kinds of justifications for
government bailouts of the rich which have so far cost the people of that
country more than $2 trillion!
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Not only that, all these most essential services are being privatized.
Health, education, drinking water, all these are being transformed into
instruments of naked profiteering by capital. Being essential services, the
scope for profits is huge.
The Prime Minister has made it very clear: “The government is not
a dhamashala.” If you have money, you can buy Kentucky Fried Chicken,
MacDonald hamburgers, Pierre Cardin shirts or Levi Jeans, they are all
available in India. If you don’t have money, you have the Free Market
freedom of either dying of disease or of cold or of hunger, or you may
choose to stay alive by either selling your kidney, or your children, or
yourself.
We’re not making it up. Read on…
(a) Collapse of the Public Health System
As a percentage of GDP, India’s public
health expenditure is the fifth lowest in the world,
even lower than Sub-Saharan countries!171 And
so the limited public health system of India was
already sick. Now, the patient is being buried.
Government hospitals are being privatised. Price
controls on medicines are being removed. India’s
patent law had enabled Indian Pharma
companies to bring down the prices of medicines
for treatment of AIDS from an astronomical
$15,000 (Rs.6 lakhs) per patient per year to just
$200 (Rs.10,000) – thus giving the gift of life to
more than 7 lakh AIDS patients in the poor countries of Africa, Latin
America and Asia. Under pressure from MNC Pharma companies, India’s
patent law has now been modified, enabling MNCs to sell all new drugs at
monopoly prices.172
This has forced citizens to bear the brunt of health spending.
Households undertake nearly three-fourths of all the health spending in
the country, while public spending is only 22 per cent (other sources account
for less than 5 %). This means that India has the most privatized health
system in the world!173 While the Indian elites boast of India as one of the
hottest destinations in ‘medical tourism’, 21% Indians have given up seeking
any kind of medical attention at all – up from 11% a decade ago – because
they cannot afford it.174
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The result is: India is the world leader in neonatal, infant and maternity
deaths. According to the World Health Organisation (WHO):175
• India accounts for 67% of the infant deaths in the world: every year 21
lakh children in India die before reaching their fifth birthday!
• More than half of these children – 12 lakh – die before they are 28 days
old: accounting for 30% of the global neonatal deaths in the world!!
• India has the highest rate of maternal mortality (that is, child birth related)
death in the world; of the 5.36 lakh maternal deaths each year in the
world, 1.4 lakh deaths or nearly 25% of the total occur in India!!!
Yet, India’s thick-skinned elites exult: India is becoming an economic
superpower, for it has the fourth highest number of dollar billionaires in the
world.
(b) The Joke about Becoming a Knowledge Superpower
While official enrolment ratios in schools for children between age 6
and 14 has considerably gone up in the country, to 80%, the effective
enrolment is much less.176 Even Prime Minister Manmohan Singh admits
that more than half the children between the age of 6 and 14 do not go to
school. 53 and 34 percent of children enrolled in Class I do not complete
Class VIII and Class V respectively.177
Way back in 1965, the Kothari Commission had recommended that
government allocate not less than 6% of the GDP to education. Actual
government spending on education never came anywhere near this figure.
And now, ever since the reforms began, in accordance with World Bank
conditionalities, successive governments have been further reducing
education expenditure. It has fallen from 3.6% of the GDP in 1992 to
2.91% in 2007-08! While the present government claims to have increased
its spending on education, in reality as a percentage of the GDP it is lower
than 2001-02 (when it was 2.98%).178
And so the government education system is on the verge of collapse.
A survey of elementary schools in India found that nearly 90,000 schools
did not even have a blackboard! Tens of thousands of schools did not have
a building!! And over 1 lakh schools were running in a single classroom!!!179
Despite these grim figures, the scoundrels sitting in Washington want
the Indian government to further reduce education ‘subsidies’. While doing
this, the government must also appear committed to fulfilling its
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constitutional obligation of providing free and compulsory education to all
children. So, under World Bank guidance, a new scheme is being
implemented. Shiksha Kendras (Education Centres) are being opened all
over the country. In these ‘schools’, local women who have studied only
up to Class VIII and in many cases only till Class V are appointed as
‘teachers’ . They are given the exalted name of ‘Vidya Sahayaks’,
‘Shikhan Sevaks’, etc. For the salary of one regular teacher, 3 to 5 such
contract teachers can be appointed. These untrained ‘teachers’ often teach
many classes simultaneously in a single room. By 2005, 400,000 such
teachers had been appointed.180 What an idea!
In government statistics, children going to these schools are being
considered at par with those going to regular schools.181 Very soon, these
Shiksha Kendras will replace regular schools. In Madhya Pradesh, this
process has begun – the cadre of regular teacher is being done away
with.182
Privatisation of Higher Education
The fate of a nation depends upon the
education of its people. It is the duty of the
state to start as many higher educational
institutions as are needed for its people –
temples of learning committed to unfolding the
mental, moral and spiritual faculties everyone
latently possesses. It goes without saying that
these institutions should be accessible to even
the last of its members.
However, in India, the government is gradually withdrawing from its
constitutional obligation to provide egalitarian higher education facilities
for the poor. As it is, a government appointed committee on “Financing of
Higher and Technical Education” has admitted that the gross enrolment
ratio (number of students as a percentage of the youth population of the
age group 17-23/18-24) is around 8-9%. The report admits that this is “not
adequate for a country that aims at transforming itself into an industrial
tiger economy, or in simple words, a developed country”. It says that the
current enrolment ratio is lower than even many developing countries of
the world. While the average high income countries have an enrolment
ratio above 60%, it is above 20% in several developing countries like
Mexico, Chile, Brazil, Malaysia and Thailand.183
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Rather than take steps to remedy this situation in keeping with its
propaganda of seeking to become an ‘industrial powerhouse’, the
government is further reducing its already paltry expenditure on higher
education, resulting in sharp increase in fees in even government aided
higher educational institutions. It has also allowed the private sector to
enter higher education and convert it into a means of making profits, so
much so that even degrees like BA, BCom and LLB have gone beyond
the reach of the vast majority of the country’s population. And in streams
like engineering, medicine and management, private colleges run by
freebooting private adventurers have simply mushroomed all over the
country during the last few years. They lawlessly charge huge sums of
money for admission to these professional courses, putting these courses
beyond the reach of all except the mega-affluent. In many of these
institutions, the infrastructure and staff are simply appalling, yet they have
been allowed to function and enroll students by the country’s higher
education regulatory bodies..
How can a country which is not concerned with imparting education
to the vast majority of its citizens call itself a knowledge superpower?
(c) Worsening Poverty
No jobs, no health care, no education for an increasing percentage
of the population. Yet the country’s narcissistic intellectuals are churning
out academic treatises showing that poverty is rapidly declining in the
country. These prizefighters of imperialist globalization have succeeded in
reducing poverty in India by so defining the term that it no longer relates to
whether or not people get their minimum requirement of calories!
The National Institute of Nutrition’s norm is that per person
consumption must be at least 157 kgs of cereals per year at the minimum.
This is the bare minimum, the average for a healthy population would
obviously be much more. However, the official
NSS survey of 2004 shows that the average
all-India per capita consumption was only 142
kgs that year!184 And this is the average, which
means that the poor must be eating much less
than even this low level.
Introduction to this essay, we repeat them for emphasis: nearly half (46%)
of India’s children under the age of three are underweight (low weight for
age, indicating both chronic and acute malnutrition); 38% are stunted (low
height for age, indicating chronic malnutrition), and 19% are wasting (low
weight for height, indicating acute malnutrition). Little wonder the United
Nations Special Rapporteur on the Right to Food, Jean Ziegler, distressingly
stated in Sept. 2006: “India has the largest number of undernourished
people in the world and one of the highest levels of child malnutrition”.185
Yet, Rollback of Food Subsidies
Clearly, the poverty situation in the country is actually a national
emergency. But the Shylocks are unconcerned, they must have their pound
of flesh. The World Bank has asked for a reduction in food subsidies. As
a justification, it has come up with the argument that the majority of the
food subsidy is siphoned off by the middle classes, so the ration system
should identify the really needy and supply them with subsidized foodgrains.
The definition of the ‘really needy’ can then be manipulated to reduce the
food subsidy bill of the government. Simultaneously, it wants the
government of India to wind up the Food Corporation of India and the
public distribution system (PDS), the only means available to the government
by which food can be provided to the country’s starving millions at
subsidized rates!186 India’s rulers are dutifully obeying these dictates.
The ‘Targeted’ Public Distribution System
As a first step, the government introduced the Targeted Public
Distribution System in 1996, wherein it introduced two kinds of ration
cards, one for those above the poverty line (called APL cards), and one
for those it considered poor (BPL cards). In
2000, prices of foodgrains for APL were
hiked to bring them close to market prices.
As a result these households have stopped
buying grain from the PDS.
But this does not mean that all those
who are poor have been given BPL cards.
Government NSS surveys show that 70.5%
of rural households either possessed no card
or an APL card – when 87% of the rural
households do not earn enough to eat two
full meals a day!187 A majority of even those
These figures are further corroborated
by the National Family Health Survey of 200506. We have given these figures in the
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India becoming a colony again...
whom the government considers as poor, that is those living below the
official poverty line of Rs.365 per capita per month, have not been given
BPL cards.188 Clearly, the real aim of ‘targeting’ is to wind up the PDS…
With a vast majority of the poor not able to
access foodgrains from the PDS, foodstocks
with the government of India soared, from 18.7
million tons in December 1997 to 63 million tons
in July 2002.189 Having thus created an artificial
surplus, the government now declared that there
was overproduction of foodgrains in the country.
It became official policy to discourage foodgrain
growth and encourage farmers to switch to
horticulture, fruits, vegetables, etc. – the imperialist agenda for India! 190
Driving down buffer stocks
The government now went into an export overdrive: between April
2000 and November 2003, a total of 24.8 million tons of PDS wheat and
rice were exported, at subsidized rates – wheat was exported at Rs.4200
a ton (or Rs.4.20 a kilo), and rice at between Rs.5650 to Rs.6000 a ton (or
Rs. 5.6-6 a kilo), prices way below prices for APL card holders! It’s
estimated that the total subsidy paid to exporters would be around Rs.1315 thousand crores.191 The World Bank has no objection to this subsidy.
Clearly, all the chatter about ‘free market’ is just hypocrisy.
While crores of people starve in the country, the government is not
willing to provide them subsidized foodgrains, but it has no qualms about
exporting foodgrains at subsidized prices!
It’s absolutely criminal. Do we need to say more to prove that the
country’s rulers have completely divorced themselves from the common
people. It’s like we’ve returned to the colonial days once again, the only
difference being that the white-skinned rulers have been replaced by blackskinned ones.
Finally, foodgrain imports
But the story of their betrayal does not end here. The government
now began taking steps to implement the next part of World Bank orders
– close down the FCI. Due to exports and domestic sales at subsidized
prices to domestic traders, food stocks with the government of India came
down rapidly; wheat stocks fell (as on April 1, that is, before procurement)
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from 260 lakh tons in 2002 to 40 lakh tons in 2005. The figure for April 1,
2005 was thus 1 lakh tons below the buffer stock norm for that date. Yet,
in 2005-06, the government allowed private traders and MNCs like Cargill
and ITC to buy directly from farmers, while deliberately forcing FCI to
reduce its procurement. The FCI procured only 92 lakh tons of wheat in
2006, less than the procurement of 148 lakh tons in 2005, even though
wheat production in 2006 was more than the previous year. In 2000, when
the crop was the same size as in 2006, procurement had been 206 lakh
tons! The result was entirely predictable: perhaps for the first time since
the creation of the FCI, private trade held far more wheat than the
government.192
With PDS and other welfare schemes of the government short of at
least 100 lakh tons of wheat, the government now had a justification for
wheat imports. In 2006, it imported 55 lakh tons of wheat. The international
grain traders, who behave like a cartel, began tightening the screws on the
Indian government. They not only forced it to relax its quality norms for
wheat imports with regards to pesticide levels and presence of pests,
weeds and diseases, they also forced up the prices. The average price at
which the government imported this infected wheat was Rs. 9287 / ton.
This was much more than the maximum support price of Rs.6500-7000 a
ton it had offered to Indian farmers that year. 193 In 2007, the government
imported more wheat, at even higher prices, of Rs. 15,000 a ton …194 The
imperialists are succeeding in their agenda of undermining our food security
and making us dependent on them for our food supplies!
There is more to this story. The imported wheat was meant for
distribution through the public distribution system, but its quality was so
bad that it resulted in an outcry; and a red-faced government was forced
to halt its distribution. In Maharashtra, after putting on hold distribution of
an incredible 31,000 tons for over six months, the state government in
mid-2008 decided to sell off 18,000 tons at Rs. 6.70 a kg, that is, at less
than half the cost of imports, while 12,000
tons was sold off as chicken feed. The
remaining 1000 tons, which was so bad that
it was not fit for animals too, was buried.
The 31,000 tons could have fed more than
3 lakh people for a year! 195 The games of
the ruling classes are absolutely headspinning…
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(d) Water Privatisation, Come Hell or High Water
Capital has no morals. It knows no Lakshman Rekhas in its lust for
profits. Its ultimate dream is to seize control of the most basic necessities
for sustaining human life and transform them into means for earning superprofits.
Unfortunately, it has so far found no way for ‘privatising’ the air we
breathe. But it is succeeding in seizing control of the world’s drinking
water supplies, and converting them into a commercial good to be sold for
profit.
Water privatization was done in a big way in Latin America in the
1990s. Water multinationals from Europe took over the drinking water
supplies in many countries, and promptly jacked up water prices, by many
times. It gave birth to powerful people’s
movements, which eventually threw out
these water MNCs from Latin America,
lock, stock and barrel. 196 Water
privatization in Dolphin Coast in South
Africa in 1998 led to the country’s worst
cholera epidemic in history, infecting
more than 25,000: millions of poor people
simply could not afford to pay the
increased water rates, and were, therefore, compelled to find water in
streams, ponds and lakes polluted with manure and human waste. 197
Yet, pushed by the World Bank, India’s rulers are taking the country
down the same path. Chandrapur in Maharashtra is the first city in the
state to privatize its water supply. Water has started flowing from the poor
to the rich localities.198 A ‘Pilot Project’ is on in Mumbai. A prelude, to
water privatization.199 In 2005, the Delhi government attempted to privatize
water distribution furtively. An RTI application exposed its plans, and the
residential colonies of Delhi rose up in revolt. The government was forced
to backpedal, and put the project on hold; the World Bank, which till then
was closely monitoring the privatization, made a complete U-turn and
declared that it was opposed to the project!200
In India, water-borne diseases are amongst the major causes of
sickness and ill-health. Privatising the already pathetic water supplies to
the poor will have catastrophic consequences.
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“Give me your blood and I will give you freedom.” This clarion call
by Netaji Subhash Bose had galvanized lakhs of people of our country into
heroic action. Scarcely would they have apprehended that a mere 50
years after independence, Delhi’s moghuls would allow rapacious western
corporations to once again ravage our land, plunder our natural resources,
suck out the last drop of blood of our people for moulding into dollars…
(e) Inflation
By middle of 2008, another spectre returned
to haunt the common man – inflation. It rose to
double digits, and remained there for many
months. Prices of rice, wheat, jowar, edible oils,
tur dal, vegetables, sugar, milk, medicines, dieselpetrol, cloth and other necessities have simply
gone through the roof.
Inflation results in the transfer of wealth
from the poor to the rich. The rich benefit, as their
profits increase with rising prices. However, the
poor suffer, especially the overwhelming majority who are in the
unorganized sector and whose wages are not indexed to inflation. Even
for the organized workers, although their wages rise marginally, it is never
enough to compensate for the rise in prices.
Inflation is a necessary byproduct of capitalism. Between 1960–
2006, prices in India have gone up by 28 times.201 But the recent spurt in
prices is a direct product of the economic reforms being undertaken in the
country, in other words, of capitalist globalization. We outline some of the
main factors below:
• Speculative capital inflows: These inflows have simply soared in the
last few years. These dollar inflows are exchanged with rupees by the
RBI, which creates money for this. This increases the money supply in
the economy. It is this tremendous increase in rupees in the economy
without any corresponding increase in production that is one of the most
important reasons for the recent price rise.
• Destruction of agriculture: The imperialists are successfully
implementing their agenda of seizing control of Indian agriculture and
destroying India’s food security. The per capita foodgrain production
has fallen to less than that during the 1940s! It is this huge decline in
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India becoming a colony again...
foodgrain production which is responsible for the sharp rise in prices of
foodgrains in the country.
• Destruction of the public distribution system: Simultaneously, the
countrywide system of ration shops is being dismantled. Through these,
the government used to supply rice, wheat, sugar and kerosene to the
poor at affordable prices; it also enabled the government to keep their
market prices under control. Now, while reducing its procurement from
farmers, the government is allowing private traders and big agro-business
corporations to buy directly from the farmers. Since the government is
no longer using its buffer stocks to control foodgrain prices, the agrobusiness corporations who now hold enormous quantities of foodgrains
are in a position to send prices soaring.
• Privatisation of essential services: Not only is the government
reducing its welfare expenditures, it is also gradually privatizing all
essential services, including health, education, electricity, even drinking
water. Hence, prices of all these are increasing. This has affected
common people very severely; to give an example of the consequences,
medical expenses are one of the most important reasons for rising
indebtedness of Indian farmers because of which they are committing
suicides.
(iii) India Private Limited, Owned by a Few Giant Corporations…
India’s rich are in a mad hurry to merge with the world’s elite
somewhere up there in the stratosphere. The western elite had colonies in
the third world to plunder natural resources and generate slave labour.
The Indian elite cannot colonise other countries, so are colonizing their
own country in a frantic rush to accumulate the maximum possible profits
in the shortest possible time. They are commandeering the resources –
coal, bauxite, iron ore, water… They also want the land, to make cars,
build golf courses, construct villas… And so they have launched an outright
war on the people. All possible weapons are being used: friendly court
orders, friendly policy makers, ‘friendly’ corporate media and a trigger
friendly police force.
In Chattisgarh, Orissa, Jharkhand, tens of thousands of adivasis are
being forcibly moved off their mineral rich lands.202 Entire villages are
being uprooted. The neo-colonialists are displacing tribals on a scale which
even the British had not dared!
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What about rehabilitation? India’s brown rulers are the true disciples
of the erstwhile white colonialists. Till recently; the government used a
colonial era Land Acquisition Act of 1894 (amended in 1984), to forcibly
grab land: all it had to do was to claim that it was being done for ‘public
purpose’, but this could be stretched to include acquiring land for corporates
too. Now (in 2007), the government has proposed an amendment to the
Land Acquisition Act – not just to make this racketeering easier, but to
also legalise it: the amendment widens the definition of ‘public purpose’ to
include corporate commercial interests!203 Under the old Act, as well as
the proposed new bill, the government is under no obligation to give the
displaced people anything other than cash compensation.
Most tribal people, or let’s say most small farmers, have as much
use for money as a Supreme Court judge has for a bag of fertilizer. In any
case, there is no need to give most tribals even monetary compensation,
as most of them have no formal title to their lands! They are simply declared
encroachers, and told to buzz off! The few who qualify for compensation,
are given a pittance. In Kalinganagar, these few were given Rs.35,000 for
land that was later sold for Rs.3.5 lakh and whose market value was even
higher.204 Yet another instance of Free Market economics at work.
This displacement is not taking place in these tribal states alone. It is
happening everywhere. Whether dams have to be built on the Narmada,
or an IT Park is to be developed in Bangalore, or shopping malls have to
built in Delhi, or Mumbai has to converted into Shanghai, or Calcutta has
to be beautified, the first move is to take over land from the poor. The
bulldozers move in, and simply demolish the houses of the poor.
How many have been displaced? No one knows. The Government
collects volumes of statistics every year, on every aspect of the economy.
But it does not have a figure for the number of people that have been
displaced by big projects or sacrificed in
other ways at the altars of ‘National
Progress’. Isn’t this astounding? How can
you measure ‘Progress’ if you don’t know
what it costs and who paid for it? How
does the market put a price on cement or
steel or electricity or a highway without
taking into account the real cost of
production, that is, without taking into
account these very real costs?
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India becoming a colony again...
Many millions are being displaced. That is for sure. What happens
to them once they are displaced? Where do they go? How do they live?
No one knows. They don’t exist anymore.
A great majority of them land up in the slums in cities, to work in the
most degrading, dehumanizing conditions. True, they are not being sent to
the gas chambers, but their quality of life is not better than Hitler’s
concentration camps.
Still their nightmare does not end. They continue to be uprooted
even from their hellish hovels when the rich want to build wide roads,
flyovers, gardens, multiplexes…
To transform Mumbai into Shanghai, the houses of the poor are
being bulldozed. Without even a pretense of rehabilitating them. 4 lakh
people lost their homes in the brutal demolitions of 2004-05; probably many
lakhs more will also have to suffer the same fate. Likewise, most of the
city’s 300,000 hawkers are being evicted, it is proposed to rehabilitate only
17,000 of them in special hawking zones.205
Only the rich have the right to live in this country now. The upper
classes are seceding from the rest of the country. It is the kind of secession
in which a relatively small section of people become immensely wealthy
by appropriating everything — land, rivers, water, freedom, security, dignity,
fundamental rights including the right to protest — from a large group of
people. It’s a vertical secession, not a horizontal, territorial one.
The word ‘GDP growth rate’ has come to have a sinister
meaning for the poor. The upper classes measure their increase in
wealth by growth in GDP. For the vast masses, it is a measure of
the devastation of their lives…
People are beginning to stir…
The people have not been silent spectators to this gory drama of
self-aggrandizement. They have been rising in protest all over the country.
Farmers have staged militant protests against seed patents, genetically
modified crop varieties, entry of Western agri-business corporations into
the country’s farming sector, and slashing of agricultural subsidies. Insurance
and bank employees have repeatedly gone on walk-outs and strikes against
financial sector reforms. Students have protested against fee hikes. Women
have organized protests against the increasing commodification of women.
Unorganised workers are getting organized in various parts of the country.
Tens of thousands of organized workers struck work in the industrial areas
of greater Delhi on April 24-25 this year (2008) to protest against worsening
labour conditions. People all across the country from Rajasthan and Delhi
to Tamil Nadu and Kerala have organized protests against water
privatization. Lakhs of fishermen have organized militant struggles against
new policies affecting their livelihood. Braving heavy police repression
and even firings in which many people were martyred, tribals in Orissa
are heroically fighting giant corporations like the Tatas and POSCO (South
Korea-US) who are seeking to take over their lands and destroy their
livelihoods and the environment of the entire region. The Jharkhandis and
Chattisgarhis are similarly fighting fierce battles to prevent their entire
region from being ravaged by giant mining corporations. People living
around bottling plants of Coca Cola and Pepsico are fighting relentlessly
demanding the closure of these companies for depleting the groundwater
in their areas. They have even succeeded in forcing the plants in Plachimada
(Kerala) and Ballia (UP) to shut down. Traders from Uttar Pradesh to
Bihar, Orissa and Jharkhand have organized militant protests against the
opening of Reliance Fresh outlets in their states, and at many places, have
forced these malls to shut down. The people of Konkan are organizing to
Part VIII
FOR A SECOND FREEDOM STRUGGLE
Dear friends,
Our country is in grave crisis. The ruling classes are mortgaging the
very sovereignty of our country for their interests of profit accumulation.
Lokayat
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India becoming a colony again...
fight attempts by corporations to take over their lands and destroy their
environment. The struggle against the attempt by Dow Chemicals to set
up a dangerously polluting research centre near Pune has spread to all
over western Maharashtra. People in rural areas all over the country have
been fighting tooth and nail to prevent governments from forcibly acquiring
their lands to set up Special Economic Zones. The most inspiring of all
these struggles was of course the heroic struggle of the people of
Nandigram, who battled the entire might of West Bengal police and the
goondaism of the ruling party and eventually forced the government to
back off. Yes, people all over the country are beginning to stir…
But many others are silent…
All these struggles have however not prevented the ruling classes
from going ahead with their sordid agenda. At the most, these struggles
have slowed down the pace of globalization of the Indian economy.
Clearly, a lot more needs to be done. It is important to deepen our
struggles, involve more people in them. It is important to widen the scope
of our struggles, broaden our demands. Most important of all, it is important
to unite our different struggles.
Apart from the large number of people who are fighting against one
or the other aspect of globalization, there are an even larger number of
people who are passive spectators to what is happening.
Quite a few of them support this or that aspect of globalization.
They have accepted the propaganda being dished out by the media. The
media tells us that foreign cars, expressways, shopping malls and luxury
consumer goods are indicators of the development of our country, and like
robots we uncritically accept it. We seem to have forgotten our own life
reality – that to be able to sit in a Mercedes-Benz and drive along an
expressway, we must first have the money to buy a Mercedes. The media
tells us that privatization will lead to increased efficiency, and we do not
ask how will it benefit us: privatization of state electricity boards has led to
a many fold increase in electricity prices, privatization of education has
sent college fees skywards, privatization of roads has led to high user
charges. It is true that the MNCs pay very well to their top executives,
but then are we going to get such a job, or are we going to end up working
as a daily wage worker in one of their ancillaries? We must look at the
world through our own spectacles.
Lokayat
73
There are also many people who are indifferent to what is happening
to the country – people from the middle income groups, students hoping to
get well-paid jobs, teachers of degree colleges and universities who have
been given decent pay hikes by the government to buy their silence, even
people working in banks and insurance companies and public sector
organizations who take a holiday when their unions strike against
globalisation. Many of us seem to be living in a make-believe world – that
nothing is going to happen to our jobs, or that even if we lose our job we
would get an equally paying or even a better-paying job. We do not want
to draw any conclusions from the fires raging all over the third world. Just
a few years ago, the ‘miracle economies’ of South-East Asia went bankrupt.
Their booming economies had been touted as proof that globalization if
done well can lead to unlimited prosperity for the third world countries.
Actually, the boom was a bubble, just like the boom in India of the past
few years. In these countries, even highly profitable companies went
bankrupt overnight, throwing millions on the streets, including executives,
managers and small businessmen – everyone except the top elite; dozens
of banks collapsed, wiping out the life savings of millions of common people.
Then, there are also not a few people who, instead of fighting the
real enemy, are fighting amongst themselves. The ruling class parties today
have nothing to give to the ordinary people – no jobs, no welfare benefits
like affordable health care, cheap education, subsidized foodgrains, cheap
electricity, nothing at all. On the contrary, they are withdrawing all the
benefits given to the ordinary people in the past. So, the only slogans they
have when they go to people for votes are that they are the representatives
and saviours of their religion, caste,
region. They are deliberately dividing
people, instilling fear in their minds that
they are under threat from the ‘other’,
mobilizing people to riot against each
other. Instead of coming together to fight
the real and common enemy, people are
torching each other’s houses, shops,
religious places, beating-raping-killing
each other. Meanwhile, the giant corporations are laughing all the way to
the bank. The biggest communal leaders have become the poster-boys of
the big business houses.
74
India becoming a colony again...
We must wake up from our slumber. We must read, think, analyze.
We must develop our political consciousness. Only then will we be able to
see through the propaganda unleashed by the ruling classes. Only then
will we be able to understand their real intentions and agenda.
It is important to dream… We can change the world!
Dear friends, fellow citizens, the ruling classes are telling us –
there is no alternative to globalization. For their interests of profit
maximization, “There Is No Alternative (TINA)” indeed! And so they
proclaim, that capitalist globalization is a historical endpoint.
It is time we stopped believing the propaganda of the intellectuals of
the ruling classes, and buckled down to fighting for building a new society
which promotes selflessness and co-operation, where production is oriented
not for the profit maximization of a few, but for fulfilling the basic needs of
all human beings – healthy food, best possible health care, invigorating
education, decent shelter, security in old age, clean pollution-free
environment.
There is no need to be despondent about the fact that there are no
tall leaders to follow. Leaders are not born in vacuum; it is social movements
which give birth to leaders. It is the freedom struggle initiated by lakhs of
ordinary people all over the country which gave birth to thousands of
leaders like Gandhi, Subhash Bose and Bhagat Singh; it is people’s struggles
that developed and matured them; it is ordinary people who gave them
strength and support; and they then led the people into making history.
Today, once again society will give birth to its leaders from amongst the
people, as the struggles advance all over the country.
The biggest and tallest trees all ultimately sprout from the Earth.
Soil, sun and air all help them grow. Struggles with the winds and storms
help them become strong. Not even the smallest of plants has ever
germinated in the sky.
We are ordinary people – citizens of our country, who love our country
– like all of you. Let us reach out to each other, understand each other, join
hands and begin our own initiatives. However dark the night be, dawn has
to come. The people are beginning to stir. Let us join them.
This is not utopia. After all, it is we, the working men and women of
India, who have created all the wealth of our country, and who can create
much more wealth, provided the necessary conditions are created. We
have all the necessary skills. Our country has enormous resources – that
there is a shortage of resources is a myth. Our collective strength, if we
create the conditions to properly harness it, can build heaven on Earth.
We repeat – all this is not utopia. But to bring it into existence, we will
have to take our own small initiatives, come together and fight to change
the world. Every end must have a beginning – only if there is a beginning
will there be an end. Let us begin our own small initiatives.
My Friends,
May not
The history of our times
Remain but this
That while slowly dying
We continue thinking
‘Dare to dream, dare to act’! At a time when opportunism is
everything, when hope seems lost, when everything boils down to a cynical
business deal, we must find the courage to dream. Today, the need of the
hour is for some of us from among the students, youth, intellectuals and
working people to dream of building a new and beautiful society. At least
some of us must take the initiative to bring people out of their feeling of
hopelessness, and inspire and fill them with dreams. In all history, it has
been a few who have taken the initiative. Later, the entire people have
joined them, to make the dream a reality. This is what will happen again
now.
Lokayat
75
We are alive
That our time
Be not measured with the clock
But be measured by the decay
And decomposition of our bones…
***
76
India becoming a colony again...
REFERENCES
Introduction to Second Edition
i
"IMF raises India’s GDP growth forecast to 9.7% for 2010", Oct 6, 2010, http://
money.sulekha.com
ii
“India boasts record 69 billionaires: Forbes”, Sept 30, 2010, http://
www.channelnewsasia.com
iii
“Asia beats Europe in wealth race”, The Deccan Chronicle, Sept 29, 2010, http://
www.deccanchronicle.com
iv
On the contrary, they have become even more weaker, because of the continued and
ever intensifying assault by the corporations-politicians-bureaucracy-police-court nexus
on the working people. The stock market boom is also purely speculative: the spike in
stock prices is the result of a sudden surge of foreign speculative capital inflow into the
stock market. Foreign Institutional Investors (FIIs) who opted for net equity sales of
$14.84 billion during crisis year 2008, returned to the Indian market and made net purchases worth $17.23 billion during 2009, and $15.62 billion by mid-September, 2010.
Once the FIIs start pulling out their investments, the stock market is bound to collapse
once again, like what happened in 2008. External factors are also turning unfavourable:
the economies of the developed countries are once again slowing down. All indications are
that the US economy is heading into a double-dip recession. Once that happens, our
exports are bound to be affected.
Introduction to First Edition
Prime Minister Manmohan Singh to Bush at White House press conference on Sept 28,
2008, The Hindu, Sept 27, 2008, http://www.thehindu.com
2 Business Standard, Dec 2007, http://www.business-standard.com/special/bill07; P.
Sainath, “Falling farm incomes, growing inequities”, India Together, Nov 22, 2005, http:/
/www.indiatogether.org
3 Utsa Patnaik, Poverty and Neo-liberalism in India, Dec 2006
4 Utsa Patnaik, “Neoliberal roots”, Frontline, Chennai, Mar 15-28, 2008, http://
www.thehindu.com/fline
5 Ibid.
6 Neelam Raaj, Times of India, Feb 12, 2007; A. K. Shiva Kumar, The Hindu, June 22,
2007
7 Kounteya Sinha, Times of India, May 4, 2007
8 Aarti Dhar, “More than one-third of malnourished children are in India: U.N. report”,
The Hindu, May 4, 2006
9 Times of India, Aug 11, 2007
1
India Becoming a Colony Again: Part I – Part VIII
Study by: Corporate Study Group of the Indian Institute of Public Administration,
New Delhi, The Telegraph, 23.6.83, cited in Aspects of India’s Economy, No. 24, pp. 8687, bulletin of the Research Group for Political Economy, Mumbai-25, http://www.rupeindia.org
11 Noam Chomsky, Class Warfare, Oxford University Press, Delhi, 1998, p. 19
12 See for instance, Serge Halimi, “Protectionism: we’ve been here before”, Le Monde
Diplomatique, March 2009; Keith Rankin, “Friedrich List propagated the myth of Adam
10
Lokayat
77
Smith as a cosmopolitan thinker”, Economics Dept., University of Auckland, Aug 4,
1996, http://keithrankin.co.nz
13 There are numerous studies on this. See for instance, Eduardo Galeano, Open Veins of
Latin America, Monthly Review Press, New York, 1973
14 For instance, an excellent study of the impact of colonialism on Africa can be found in
Walter Rodney, How Europe Underdeveloped Africa, London and Tanzanian Publishing
House, Dar-Es-Salaam 1973 (Available on internet)
15 Walden Bello and others, Dark Victory: The US, Structural Adjustment and Global
Poverty, Third World Network, Malaysia, 1994, p. 69
16 Statistical Outline of India, 1999-2000, Tata Services Ltd., Mumbai, p. 177
17 Dalip S. Swamy, The World Bank and Globalisation of Indian Economy, Public Interest
Research Group, Delhi, 1994, pp. 5, 15, 19
18 Ibid., p. 17
19 Frederick Clairmont, Economic and Political Weekly, Mumbai, No. 1-2, Jan 8, 2000,
pp. 26-27
20 Sarah Anderson and John Cavanagh, Third World Resurgence, Third World Network,
Malaysia, No. 97, Sept 1998, p. 37
21 Ibid., p. 38
22 Jayati Ghosh, Frontline, www.frontline.in, Dec 18, 1998, p. 94
23 John Vidal and Marc Vilner, Third World Resurgence, No. 97, Sept 1998, p. 12, op.cit.
24 See for instance, Robert McChesney and others, “The Sales Effort and Monopoly
Capital”, Analytical Monthly Review, Cornerstone Publications, Kharagpur, West Bengal,
April 2009
25 Human Development Report of United Nations, 1993: cited in Aspects of India’s
Economy, No. 15, p. 8, op.cit.
26 Aviva Aron-Dine and Arloc Sherman, New CBO Data Show Income Inequality Continues to Widen, Center on Budget and Policy Priorities, Washington DC, Jan 23, 2007,
http://www.cbpp.org/cms
27 This is well documented. See for instance, Neeraj Jain, Globalisation or Recolonisation?,
Lokayat Publication, Pune, India, 2006
28 For an excellent study of origins and economics of monopoly corporations, see Paul A.
Baran and Paul M. Sweezy, Monopoly Capital, K. P. Bagchi and Co., Calcutta, 1994
29 This is very well documented. See for instance, Harry Magdoff, The Age of Imperialism, Monthly Review Press, New York
30 Editors, Monthly Review, Monthly Review Foundation, New York, Jan 1984, p. 1
31 Samir Amin, “The Political Economy of the Twentieth Century”, Monthly Review, June
2000, ibid.
32 Quoted in Ethan B. Kapstein, Foreign Affairs, May-June, 1996, p. 28
33 See Economic Report of President (USA), 2008, Table B–54: Capacity utilization rates,
1959–2007 (available on Internet)
34 Trade Development Report, UNCTAD, 1999, p. 143
35 Total merchandise imports of India stood at $215.41 billion during 2007-08, registering
a substantial rise of 32.3 percent. The biggest item on the import bill was petroleum crude
and products, which constituted 32 percent of total imports: they increased 35 percent
over the previous year to stand at US $70.54 billion. The other most important import
heads were: machinery – rose by 47% to touch $28.8 billion (13.3 percent of total
imports), electronic goods – rose 28 percent to $18 billion (8.5 percent of total imports),
78
India becoming a colony again...
gold – rose 16% to reach $16.7 billion (7.7 percent of total imports). Taken from http://
www.epwrf.res.in/upload/MER/mer10806012.pdf
36 “Economic Survey”, cited in Economic and Political Weekly, Mumbai, Mar 11, 2000, p.
859 and Financial Express, July 29, 2008, http://www.financialexpress.com/news
37 Financial Express, Sept 4, 2008, http://www.financialexpress.com/news
38 Times of India, Sept 1, 1996, cited in Aspects of India’s Economy, No. 21, p. 41, op.cit.
39 This is discussed in detail in Neeraj Jain, Globalisation or Recolonisation?, op. cit., pp.
57-62
40 Prashant Bhushan, The Revolving Door of the World Bank : deposition by Prashant
Bhushan before the “Independent People’s Tribunal on the World Bank in India”, on Sept
21-24, 2007, http://www.worldbanktribunal.org/press-release-4.html
41 Arun Ghosh, The Hindu Business Line, Jan 25, 2000 and Feb 21, 2000; Sucheta Dalal,
Indian Express, Mar 26, 2000; Sharad Pradhan, Sakal, Pune, Jan 21, 2000
42 Praful Bidwai, “Of Sleazy, Criminalised Capitalism”, Frontline, May 12 - 25, 2001
43 Report On Political Developments, Communist Party of India, Marxist (Adopted by
the Central Committee meeting held on Aug 26-28, 2002), http://www.cpim.org/documents/2002_sept_pol_report_cc.pdf
44 “MSEB seeks MERC nod to buy extra power at higher rates”, Times of India, Nov 3,
2008, http://timesofindia.indiatimes.com/Mumbai
45 “Govt vows to break steel, cement cartel”, Maharashtra Herald, Pune, April 17, 2008;
also see “MRTPC pulls up cement majors for cartelization”, Times of India, Mar 4, 2008
46 Anjali Doshi ad B. R. Srikanth, “A leader in medical tourism, almost”, Hindustan Times,
Oct 19, 2006; “Country looks at Rs. 225 crore dental tourism opportunity by 2012”,
Indian Express, Jan 24, 2007
47 Siddhartha Kashyap, “Drug trials need much more than tax exemption,” Times of India,
Mar 2, 2007
48 “India No. 2 destination for clinical trial outsourcing”, India Times Infotech, Jan 26,
2007, http://infotech.indiatimes.com
49 Scott Carney , “Testing Drugs on India’s Poor”, Dec 19, 2005, http://www.wired.com/
medtech/drugs/news
50 Darryl D’Monte, “McKinsey’s Mumbai”, InfoChange News and Features, Nov 2004,
http://infochangeindia.org/200411016098/Urban-India/Analysis
51 Praful Bidwai, “The great land grab”, Frontline, Sept 9-22, 2006
52 Sanjay Sangvai, “Land grab by Rich: The Politics of SEZs in India”, July 5, 2006, http:/
/www.southasian.org
53 Praful Bidwai, “India: Special Economic Zones, Path to Massive Land Grab”, Feb 12,
2007, http://ipsnews.net
54 “Companies got undue tax benefit: CAG”, Times of India, May 16, 2007
55 See Part VII, Section (ii) for facts and references
56 Praful Bidwai, “A caring state”, Hard News, June 25, 2009, www.hardnewsmedia.com
57 “Guj offers Rs. 9.6K cr loan for Nano?”, Times of India, Nov 12, 2008
58 Aspects of India’s Economy, Nos. 44-46, op. cit.
59 See endnote 9
60 Aspects of India’s Economy, Nos. 44-46, op.cit.
61 Ibid.
Lokayat
79
McKinsey Global Institute, “The Bird of Gold: The Rise of India’s Consumer Market”, cited in Aspects of India’s Economy, Nos. 44-46, April 2008, ibid.
63 C. P. Chandrasekhar and Jayati Ghosh, “Prospect of an industrial recession”, The
Hindu Business Line, Nov 4, 2008
64 Ibid.
65 Dhruv Agarwala, Kartik Varma, “Going strong at 50”, Financial Express, Sept 29,
2008, http://www.financialexpress.com
66 Business Standard, 16/3/07, cited in Aspects of India’s Economy, Nos. 44-46, op. cit.
67 Jayati Ghosh, “Too Much of a Good Thing”, Macroscan, Nov 17 2007, http://
www.macroscan.com/cur/nov07
68 C. P. Chandrasekhar, “Democratic Deficit”, Frontline, July 19-Aug 1, 2008
69 “The Big Small Scale Industry Problem”, Feb 26, 2004, http://www.financialexpress.com;
roughly similar facts given in: Small And Medium Enterprises In India, http://
www.dsir.gov.in/reports
70 Summary Results of Third Census. Reference Period : 2001-02, http://dcmsme.gov.in/
ssiindia/census/sumryres.htm
71 Sushil Khanna, Economic and Political Weekly, Mumbai, No. 45, Nov 6, 1999, pp.
3235-36
72 Summary Results of Third Census, op. cit.
73 Ibid. This figure includes both sick units and incipient sick units.
74 “2 lakh small, medium units may turn sick on slowdown”, The Hindu Business Line,
Dec 24, 2008
75 Awanish Kumar and Aditi Dixit, “Structural Adjustment Programme (Sap) and the
Organised Sector Employment in India”, Asian Journal Of Public Affairs, Vol. 2, No. 2,
http://www.spp.nus.edu.sg
76 Darryl D’Monte, “Artisanal weavers struggling to survive”, India Together, Sept 9,
2008, http://www.indiatogether.org/2008; “APCO chief alleges suicides by weavers, The
Hindu Business Line, Nov 30, 2004; Unending misery for weavers, K.M. Dayashankar,
The Hindu, Dec 8, 2008
77 Pinaki Das, “Factory trawler threat to Digha fishermen”, Times of India, Aug 9, 2009,
http://timesofindia.indiatimes.com; Harshida Pandya, “Saurashtra fishermen at sea over
foreign trawlers”, Business Standard, May 3, 2004, http://www.business-standard.com;
“Traditional fishermen oppose Fisheries Bill”, The Hindu, Dec 10, 2009, http://
www.thehindu.com
78 V. Sridhar, “Wal-Mart walks in”, Frontline, Dec 30, 2006 - Jan 12, 2007
79 Cited in “Walmart.com 2005 sales top $1 billion”, Internet Retailer, http://
www.internetretailer.com/internet/marketing-conference
80 The estimates of size of India’s retail market vary; AC Nielsen cited in footnote 78
above puts it at $250 billion, whereas AT Kearney estimates it at US$ 202.6 billion (cited
in “The Retail Industry”, IBEF, March 23, 2006, http://www.ibef.org/Archives)
81 See Neeraj Jain, Globalisation or Recolonisation?, op. cit., pp. 127-130 for a more
detailed discussion on this
82 Utsa Patnaik, Theorizing Food Security and Poverty in the Era of Economic Reforms,
April 12, 2005, revised Nov 2005
83 Ibid.
84 Subodh Varma, “Why farmers still pray for rain”, Times of India, June 8, 2007; Planning Commission, Ninth Plan, Vol. I, p. 37, quoted by Arun Ghosh in The Indian Economy,
1998-99: An Alternate Survey, Delhi Science Forum, New Delhi, pp. 15-16
62
80
India becoming a colony again...
Utsa Patnaik, Theorizing Food Security and Poverty in the Era of Economic Reforms,
op. cit.
86 Basic Statistical Returns, RBI, taken from Aspects of India’s Economy, No. 36-37, p. 36,
op.cit.
87 Arvind Sivaramakrishnan, “Food insecurity: a form of violence”, The Hindu, March 19,
2008
88 Economic Survey, 1997-98 and 2004-05: cited in Aspects of India’s Economy, Nos. 3940, 2005, p. 38, op.cit.
89 K Varadharajan, “Peasantry & The August Campaign”, People’s Democracy, July 23,
2006, http://pd.cpim.org/2006/0723; Hari P. Sharma, “Nuclear Cement For US
Imperialism’s “Strategic Partnership” With India”, Countercurrents.org, July 15, 2006
90 Report of the Steering Committee on Agriculture and Allied Sectors for Formulation of
the 11th Five Year Plan (2007-2012), Planning Commission, April 2007: cited in Aspects
of India’s Economy, Nos. 44-46, op.cit.. Montek Singh Ahluwalia also admits to this, in
fact his figures are even lower and he says that growth of agricultural GDP has been about
1.5% per year after 1996 (27th Jawaharlal Nehru Memorial Lecture, London, 20 April
2005)
91 Report of the Working Group for the 11th Five-Year Plan on Crop Husbandry, Agricultural Inputs, Demand-Supply Projections and Agricultural Statistics, Dec 2006, cited in
Aspects of India’s Economy, Nos. 44-46, ibid.
92 Utsa Patnaik, Poverty and Neoliberalism in India, Feb 2006, revised in Dec 2006
93 Ibid.
94 Absorption is different from Output, and is defined as: Absorption = Net Output +
Imports – Net addition to public stocks; where: Net Output = 0.85 x Gross Output
95 Utsa Patnaik, Poverty and Neoliberalism in India, op.cit.
96 “Less Wheat Import by India to Impact Prices in 2008-2009”, Resource Investor, May
28, 2008, http://www.resourceinvestor.com
97 Bhaskar Goswami, “Why is India importing wheat ?”, Countercurrents.org, May 16,
2007
98 Nagesh Prabhu, “66.6 percent of state’s farmer households are in debt”, The Hindu,
Sept 18, 2005
99 Vandana Shiva, “Bitter Harvest”, Times of India, May 4, 2007
100 “States to adopt news laws for contract farming”, Economic Times, August 31, 2005,
taken from IBEF, http://www.ibef.org; on how Centre and World Bank are armtwisting
unwilling state governments, see Gautam Dheer, “Deadline draws near Punjab still to
amend APMC Act”, Express India, Mar 03, 2008, http://www.expressindia.com
101 Utsa Patnaik, Theorizing Food Security and Poverty in the Era of Economic Reforms,
op. cit.
102 Bombay Times, Times of India, March 28, 2000
103 “6 PSU banks join Rs 1 lakh crore club”, rediff news, June 26, 2007, http://in.rediff.com/
money/2007
104 “LIC Completes 52 years of service to its customers”, Press Release, LIC, Sept 1,
2008, http://www.licindia.com/images/Press_Release_52yrs.pdf
105 “Public Sector Domination Continues In Insurance Sector”, People’s Democracy, June
22, 2008, http://pd.cpim.org/2008/0622_pd
106 Jayati Ghosh, The Indian Economy 1998-99: An Alternate Survey, op. cit., p. 81
85
Lokayat
81
“In defence of nationalized LIC and GIC”, All India Insurance Employees Association
Pamphlet, Part I, pp. 45-46
108 Ibid.
109 Siddhartha Kashyap, “Mediclaim clients get shock treatment”, Times of India, October 13, 2006
110 C R Sridhar, “Wall Street — Cold, Flat, and Broke”, MRZine, Oct 10, 2008, http://
www.monthlyreview.org/mrzine
111 “Three pvt firms, SBI to run PF”, Press Trust of India, July 30, 2008, http://
www.business-standard.com/india/news
112 “Govt allows pvt PFs to invest 15 pc funds in stock markets”, Outlook India, Aug 15,
2008, http://news.outlookindia.com
113 Jeremy Kaplan, “Pension Funds Weakened By Stock-Market Decline”, Time, Oct 31,
2008, http://www.time.com
114 Kevin Martinez, “California Pension Funds Close To Bankruptcy”, Global Research,
Feb 1, 2009
115 Maneesh Pandey, “Will Delhi be global e-waste capital”, Times of India, Aug 3, 2006
116 Jacob Baynham, “India: World’s Shipping Toxic Waste Dump”, truthout, July 6, 2008,
http://www.truthout.org/article
117 “Garbage from Britain being dumped in India”, Times of India, Sept 9, 2008
118 Sonu Jain, “Stalling one ship, letting a sea of asbestos flow in”, Indian Express, Jan 6,
2006, http://www.indianexpress.com; Gopal Krishna, “Toxic Tours - XVII: White asbestos: Silent killer”, InfoChange News & Features, Jan 2004
119 Nityanand Jayaraman, “How big business gets away with environmental violations”,
InfoChange News and Features, Oct 2005; Rifat Mumtaz, Manshi Asher, Amitabh
Behar, “Rivers for sale: The privatisation of common property resources”, InfoChange
News & Features, Oct 2005
120 Nityanand Jayaraman, “Robbing Paul to pay Peter: Industrial water vs drinking
water”, InfoChange News & Features, Oct 2005
121 “Chemical Park increases cancer risk in Cuddalore”, Mar 23, 2008, Thaindian News,
http://www.thaindian.com/newsportal
122 “Paradip, Orissa”, Greenpeace report, http://www.greenpeace.org/india/news/bahutho-gaya-greenpeace-and/paradip-orissa
123 “Chemical industries in Eloor a health hazard: Greenpeace”, InfoChange News &
Features, sourced from: www.greenpeaceindia.org, Sept 10, 2003
124 Atul Thakur, “India has two most polluted spots”, Times of India, Oct 11, 2007
125 This is very well documented. See for instance: Larry West, “Coca-Cola Charged with
Groundwater Depletion and Pollution in India”, http://environment.about.com/od/
waterpollution/a/groundwater_ind.htm; “TERI faults Coca-Cola for depleting community water resources”, InfoChange News & Features, Feb 2008; Neeraj Jain, “Thanda
Matlab Coca Cola”, Lokayat publication, Pune
126 “India lost over 26,000 sq km of dense forests”, Press Trust of India, July 19, 2005,
http://www.highbeam.com
127 Someshwar Singh, “ The Covert Ground-Water Crisis”, Third World Network, March
3, 2000, http://www.twnside.org.sg
107
82
India becoming a colony again...
Environmental Support Group, http://www.esgindia.org/campaigns/
envt.decision.making/index.html
129 Nuclear Power: Outlook for New U.S. Reactors, Updated March 9, 2007: Report
prepared for Members of US Congress by Larry Parker and Mark Holt (Specialists in
Energy Policy), http://www.fas.org/sgp/crs
130 Mycle Schneider, 2008 World Nuclear Industry Status Report: Western Europe, Sept
19, 2008, available on internet
131 Ibid.; “French, UK, Finnish Regulators: Have Raised Areva EPR Issues”, The Wall
Street Journal, Nov 2, 2009, http://online.wsj.com
132 Helen Caldicott, Nuclear Power is not the answer to Global Warming or anything else,
Melbourne University Press, Australia, 2006
133 “The nuclear waste crisis in France”, Greenpeace document, May 30, 2006
134 Helen Caldicott, op.cit., p. 76
135 M. V. Ramana, Suchitra J. Y., “Flaws in the pro-nuclear argument”, InfoChange News
& Features, June 2006
136 See for instance, Bittu Sahgal, “Nuclear fantasy: not everyone in India is enthralled by
the `Hindu bomb’”, New Internationalist, Aug, 1998, http://findarticles.com; also see
Helen Caldicott, op. cit.
137 This is also well documented. See for instance, Helen Caldicott, ibid.; M. V. Ramana,
Suchitra J. Y., “Flaws in the pro-nuclear argument”, op. cit.; Dr Michael Blockey, “Nuclear
Power – Four Times More Costly, Now And In The Future”, http://
www.bellingeninstitute.com.au
138 Siddharth Varadarajan, “America, India and outsourcing imperial overreach”, The Hindu,
July 13, 2005
139 Siddharth Varadarajan, “Between the Nimitz and the deep blue sea”, The Hindu, July
5, 2007
140 Siddharth Varadarajan in his article cited in endnote 139 writes that senior US military
officials had floated the idea of a nuclear cooperation agreement with India as early as in
December 2001, as an incentive for India to cooperate in US military plans and allow its
military facilities to be used by US armed forces. The report commissioned by the
Pentagon in 2002, referred to in endnote 138, also expresses similar views.
141 Brahma Chellaney, “Revelations unravel hype and spin”, The Hindu, Sept 5, 2008
142 C. P. Chandrasekhar, “The Industrial Recession: New or Ongoing?” Macroscan, Nov
18, 2008
143 C.P. Chandrasekhar and Jayati Ghosh, “India and the Global Financial Crisis”
Macroscan, Oct 15, 2008
144 See writings of Paul Sweezy and Harry Magdoff, in various issues of Monthly Review,
New York; & their book Stagnation and Financial Explosion, pub. by Aakar, Delhi, 2008
145 Noam Chomsky, Profit over people, Madhyam Books, Delhi, 1999, pp. 23-24
146 C.P. Chandrasekhar , “Neoliberal Discomfort”, Macroscan, April 15, 2008
147 Abhijit Roy, “Role of FIIs in Indian capital market”, The Hindu, April 26, 2000 and
Editorial, The Hindu, April 14, 2000
148 Times of India, Mar 17, 2006
149 “Trade deficit shoots up”, Times of India, Nov 4, 2008
150 “Exports dip 15% on meltdown”, Times of India, Nov 11, 2008
151 A V Rajwade, “A daunting agenda”, Business Standard, Sept 23, 2008, http://
www.business-standard.com
152 The Hindu, July 15, 2008
128
Lokayat
83
Indian Express, Nov 24, 2008
P. Vaidyanathan Iyer, “To build dollar reserves, India looks at deal with US Fed,
European Bank”, Indian Express, Nov 23, 2008
155 “Ex-chief economist of IMF to advise PM”, Times of India, Nov 4, 2008
156 Awanish Kumar and Aditi Dixit, op.cit.; Surajit Mazumdar, “The Private Corporate
Sector”, Alternate Economic Survey, India, 2006-07, Daanish Books, Delhi, p. 129
157 Amit Bhaduri, “A Failed World View”, Economic & Political Weekly, Mumbai, Jan 31,
2009
158 Vinay Kamath, “Bajaj: Back to the future”, The Hindu Business Line, May 27, 2004;
“Bajaj Auto Limited”, http://www.answers.com/topic/bajaj-auto-limited
159 Same as in endnote 156
160 Aspects of India’s Economy, Nos. 36-37, p. 114, op.cit.
161 “ITES and BPO Services”, http://india.gov.in/sectors/communication/ites_bpo.php
162 Aspects of India’s Economy, Nos. 36-37, pp. 105, 107, op.cit.
163 Ibid., pp. 94-95
164 Ibid., pp. 107-13
165 P. 19, http://nceus.gov.in/Condition_of_workers_sep_2007.pdf
166 See endnote 54
167 P. Sainath, “BHEL: the turtle and the hare-brained”, The Hindu, June 18, 2005
168 While it is difficult to say how much public money has been gobbled up by these big
business houses with the connivance of the government, if we add the figures given by
Sainath in endnote 167 to figures in the following newsreports, then it is evident that the
total would definitely be more than Rs. 1 lakh crores in the last decade alone: In March
2000, the All India Bank Employees Association (AIBEA) published the names of those
defaulters of loans to public sector banks and financial institutions who have outstanding
loans of more than Rs. 1 crore. According to a report in the Indian Express, the “defaulters’ list is a who’s who of big industry houses, many of them heads of powerful industry
associations.” The list includes the Tatas, Birlas, Thapars, Singhanias, Baba Kalyani,
Modi, Vijay Mallya, etc. While the total outstanding loan amount added up to a massive
Rs 40,000 crores, the actual amount was much more as the the report says that the list
was partial, with many industrial houses like the “Jindals, Ruias, Mittals, Mafatlals who
have all been helped with waivers and rescheduling of loans … barely represented”
(Sucheta Dalal, Indian Express, April 2, 2000). In 2008, the AIBEA published another
list of more than 2000 willful defaulters, many of them big business houses, who had
outstanding loans of more than Rs. 20,000 thousand crores (The Hindu, Aug 16, 2008)
169 V. Sridhar, “Corporate India has no reason to sulk”, The Hindu, Mar 3, 2008
170 Aspects of India’s Economy, Nos. 44-46, op. cit.
171 Mohan Rao, “In Poor Health”, Times of India, March 27, 2006
172 Randeep Ramesh, “Cheap Aids Drugs under Threat”, The Guardian, March 23, 2005;
see also Neeraj Jain, Globalisation or Recolonisation, op. cit., p. 260
173 Jayati Ghosh, “Unhealthy Burden”, Frontline, Sep. 23-Oct. 06, 2006
174 P. Sainath, “Health as someone else’s wealth”, The Hindu, July 5, 2005
175 T. V. Sivanandan, “Challenge of newborn health babies’ healthcare grows bigger”, The
Hindu, Jan 9, 2005; Editorial: Mother and Child, Times of India, Jan 24, 2008
176 Jayati Ghosh, “Education for a few”, Frontline, Jul. 29-Aug. 11, 2006
177 Editorial, The Hindu, Feb 25, 2005
178 P. R. Panchmukhi, Economic and Political Weekly, Mar 4-10, 2000, p. 839; Aspects of
India’s Economy, Nos. 44-46, op. cit.
153
154
84
India becoming a colony again...
“No blackboards in 90,000 schools”, The Tribune, July 27, 2007, http://
www.tribuneindia.com/2007
180 Anita Joshua, “Panel questions data on education”, The Hindu, Jan 2, 2008; Aspects of
India’s Economy, Nos. 44-46, op. cit.
181 Anita Joshua, ibid.
182 Aspects of India’s Economy, Nos. 44-46, op. cit.
183 Report of the CABE Committee on Financing of Higher and Technical Education, June
2005, pp. 10-11, http://www.education.nic.in/cabe
184 Aspects of India’s Economy, No. 42, p. 39, op.cit.
185 Kounteya Sinha, “More Indians hungry now than in 1990s”, Times of India, Sept., 24,
2006
186 World Bank document, India: Country Economic Memorandum, Vol. II – Agriculture:
Challenges and Opportunities: this is cited and the issue explained in greater detail in
Neeraj Jain, Globalisation or Recolonisation?, op. cit., pp. 262-3.
187 Madhura Swaminathan, “Public distribution system and social exclusion”, The Hindu,
May 7, 2008; the figure 87% is taken from endnote 4
188 Madhura Swaminathan, ibid.
189 Aspects of India’s Economy, Nos. 36-37, p. 127 and No. 42, p. 45, op.cit.
190 Thus, PM Vajpayee told peasants at a meeting in Haryana to look beyond wheat and
paddy and switch to horticulture, floriculture and oilseeds and vegetable production and
have a good export potential”: Aspects of India’s Economy, No. 42, pp. 49-50, op.cit.
191 Aspects of India’s Economy, Nos. 36-37, pp. 149-150, ibid.; the export prices have
been taken from Report of USDA, GAIN Report #IN2016, Date 4/3/2002, http://
www.fas.usda.gov/gainfiles/200204/135683887.pdf
192 Aspects of India’s Economy, No. 42, pp. 47, 52-53, 62, ibid.
193 Ibid., pp. 69, 75-77, 79-81
194 Editorial, “The wheat puzzle”, The Hindu, Sept 29, 2007
195 Rupashree Nanda and Jency Jacob, “Imported red wheat worth Rs 3.7 cr sold as
chicken feed”, IBN Live, May 14, 2008, http://ibnlive.in.com/news
196 P. Sainath, “Privatisation: come hell or high water”, The Hindu, Mar 22, 2006
197 Pratap Ravindran, “Water privatisation — Reaching epidemic proportions”, The Hindu
Business Line, March 25, 2003
198 “Private water, public misery”, Frontline, Apr. 08 - 21, 2006
199 P. Sainath, “Privatisation: come hell or high water”, op. cit.
200 “Private water, public misery”, Frontline, op. cit.; Bharat Dogra, “Right to Information Exposes World Bank Water Deal”, Nov 6, 2005, http://ipsnews.net
201 Sulabha Brahme, Mahagai Kasha Mule Vadate (in Marathi), Shanker Brahme Samaj
Vigyan Granthalaya Publication, Pune, 2006, p. 1
202 Numerous articles on this are available on the internet. See for example, “Free Dr.
Binayak Sen, Immediately!”, Editorial, Analytical Monthly Review, op. cit., June 2007
203 Neha Sakhuja, “Land acquisition, rehabilitation bills cater to corporate interests”,
Down to Earth, Jun 15, 2008
204 Arundhati Roy, “There is a fury building up across the country”, http://www.hindu.com/
thehindu/nic/arundhati.htm
205 Aspects of India’s Economy, Nos. 44-46, op. cit.
ABOUT OURSELVES
179
***
Lokayat
85
Who has become free?
From whose forehead has slavery’s
stain been removed?
My heart still pains of oppression
Mother India’s face is still sad…
Who has become free?
Lokayat
Ali Sardar Jafri wrote this poem a few years after independence.
But these lines accurately describe the current situation in our country
today...
In the name of Globalisation, giant Multinational Corporations
(MNCs) are being invited into the country – the country is now being
run solely for the profit maximisation of big foreign and Indian
corporations. In connivance with the politicians-bureaucracy-policecourts, they have launched a ferocious assault to dispossess the poor of
their lands, forests, water and resources – in order to set up SEZs, huge
infrastructural projects, golf courses, residential complexes for the rich,
etc. Indian agriculture is being deliberately destroyed – so that it can be
taken over by giant agribusiness corporations. The consequence: nearly 2
lakh farmers have committed suicides in the past ten years. Tens of
thousands of small businesses have downed their shutters. In the name of
Privatisation, public sector corporations, built out of the savings and by
the sweat and toil of the common people, are being handed over at
throwaway prices to these scoundrels. Even welfare services, from
education to health to the public distribution system and now even drinking
water supplies are being privatised, to be taken over by these corporations
and transformed into instruments of naked profiteering. There are simply
no decent jobs for the youth; probably nearly half the population is
unemployed or underemployed. The imperialists want to control what we
eat, drink, see, think, read. And so along with MNC capital, imperialist
culture is also flowing in.
As the economic system becomes more and more sick, the social
and political system is also becoming more and more degenerate. Allpervasive corruption, continuation of the age-old caste-based social system
because of which atrocities on the dalits take place almost daily, a communal
political system that divides people in the name of religion and fills them
with hatred against each other, a value system that promotes crass
86
India becoming a colony again...
Lokayat
87
88
India becoming a colony again...